VA Home Loan Program Reform Act
This bill authorizes the Department of Veterans Affairs (VA) to take certain actions in cases of default on home loans under the VA home loan program and establishes a partial claim program.
First, the bill authorizes the VA to pay the holder of a loan guaranteed by the VA an amount necessary to avoid the foreclosure of the loan, provided that the holder of the loan and the veteran obligated on the loan execute documents to ensure the VA obtains a secured interest in the property covered by the loan.
The VA must prescribe loss mitigation procedures to help prevent the foreclosure of such a home loan. The VA may not take specified administrative actions (e.g., consent to the modification of loan terms) until the sequence of mitigation options has been completed.
Next, the bill establishes a five-year Partial Claim Program under which the VA may make a partial claim (purchase a portion of the indebtedness) on VA loans for primary residences that are in default or at imminent risk of default. Individuals who default on loans for which the VA has made a partial claim under this program must be liable to the VA for any loss resulting from the default.
Finally, the VA must report to Congress on its strategy to ensure that veterans who purchase homes under the VA home loan program are not at a disadvantage when attempting to secure representation by a real estate agent or broker.
[119th Congress Public Law 31]
[From the U.S. Government Publishing Office]
[[Page 139 STAT. 475]]
Public Law 119-31
119th Congress
An Act
To amend title 38, United States Code, to authorize the Secretary of
Veterans Affairs to take certain actions in the case of a default on a
home loan guaranteed by the Secretary, and for other
purposes. <<NOTE: July 30, 2025 - [H.R. 1815]>>
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled, <<NOTE: VA Home Loan
Program Reform Act.>>
SECTION 1. <<NOTE: 38 USC 101 note.>> SHORT TITLE.
This Act may be cited as the ``VA Home Loan Program Reform Act''.
SEC. 2. AUTHORITY OF THE SECRETARY OF VETERANS AFFAIRS TO TAKE
CERTAIN ACTIONS IN THE CASE OF A DEFAULT ON A
HOME LOAN GUARANTEED BY THE SECRETARY.
(a) In General.--Section 3732 of title 38, United States Code, is
amended--
(1) in subsection (a)--
(A) in paragraph (1), by striking ``obligation''
each place it appears and inserting ``loan'';
(B) in paragraph (2)--
(i) by amending subparagraph (A) to read as
follows:
``(A) <<NOTE: Determination.>> The Secretary may, under terms and
conditions determined by the Secretary--
``(i) pay the holder of a loan guaranteed under this chapter
an amount necessary to avoid the foreclosure of such loan;
``(ii) require the holder of the loan and the veteran
obligated on the loan to execute all documents necessary to
ensure the Secretary obtains a secured interest in the property
covered by the loan; and
``(iii) <<NOTE: Records.>> require the holder of the loan
to take any actions necessary to carry out this paragraph,
including preparing, executing, transmitting, receiving, and
recording documents, and requiring the holder of the loan to
place the loan in forbearance.'';
(ii) in subparagraph (B), by striking
``obligation'' each place it appears and inserting
``housing loan''; and
(iii) by adding at the end the following new
subparagraphs:
``(C)(i) Any decision by the Secretary under this paragraph is final
and is not subject to judicial review.
``(ii) For purposes of section 511 of this title, any decision under
this paragraph shall not be treated as a decision under a law that
affects the provision of benefits.
[[Page 139 STAT. 476]]
``(D)(i) <<NOTE: Standards. Certification. Compliance.>> The
Secretary may establish standards for processing payments under this
paragraph based on a certification by a holder of a loan guaranteed
under this chapter that the holder has complied with all applicable
requirements established by the Secretary.
``(ii) <<NOTE: Audits.>> The Secretary shall carry out, on a
random-sampling basis, post-payment audits to ensure compliance with all
requirements described in clause (i).''; and
(C) in paragraph (5), by striking ``obligation'' and
inserting ``loan'';
(2) in subsection (c)--
(A) in paragraph (1), in the matter preceding
subparagraph (A), by striking ``subsection--'' and
inserting ``subsection:''; and
(B) in paragraph (10)(B)(i), by striking
``forebearance'' each place it appears and inserting
``forbearance''; and
(3) by adding at the end the following new subsection:
``(d) <<NOTE: Procedures. Contracts.>> The Secretary shall
prescribe loss mitigation procedures, including a mandatory sequence in
which the holder of a loan guaranteed under this chapter shall offer
loss mitigation options (including an option to enter into a partial
claim agreement under the VA Home Loan Program Reform Act) to a veteran,
to help prevent the foreclosure of such loan. The Secretary may not
purchase an entire such loan until the veteran has completed such
sequence.''.
(b) Relationship to Other Powers of Secretary.--Section 3720 of such
title is amended--
(1) in subsection (a), by striking ``Notwithstanding'' and
inserting ``Except as provided in subsection (h),
notwithstanding'';
(2) by redesignating subsections (f) through (h) as
subsections (e) through (g), respectively; and
(3) by adding at the end the following new subsection (h):
``(h) The Secretary may not take any action under paragraph (2),
(3), (4), or (5) of subsection (a) with respect to a loan guaranteed
under this chapter before the completion of the sequence of mitigation
options offered to the veteran to whom the loan is made under section
3732(d) of this title.''.
SEC. 3. PARTIAL CLAIM PROGRAM OF THE DEPARTMENT OF VETERANS
AFFAIRS.
(a) In General.--Subchapter III of chapter 37 of title 38, United
States Code, is amended by adding at the end the following new section:
``Sec. 3737. <<NOTE: 38 USC 3737.>> Partial Claim Program
``(a) Establishment.--The Secretary shall carry out a program, to be
known as the `Partial Claim Program', under which the Secretary may make
a partial claim, described in subsection (b), with respect to a loan--
``(1) guaranteed under this chapter;
``(2) regarding the primary residence of the borrower; and
``(3) <<NOTE: Determination.>> that the Secretary
determines is in default or at imminent risk of default.
``(b) Partial Claim Described.--A partial claim described in this
subsection, with respect to a loan described in subsection
[[Page 139 STAT. 477]]
(a), is the purchase by the Secretary of a portion of indebtedness under
the loan, through a transaction under which the Secretary--
``(1) <<NOTE: Payment. Determination.>> pays to the holder
of the loan the amount of indebtedness, subject to subsection
(c), that the Secretary determines necessary to help prevent or
resolve a default; and
``(2) receives a secured interest in the property that
serves as collateral for the guaranteed loan, which is
subordinate to the first lien guaranteed loan for such property.
``(c) Administration of Partial Claim.--(1)(A) Subject to
subparagraph (B), the amount of a partial claim under this section with
respect to a loan guaranteed described in subsection (a) may not exceed
25 percent of the unpaid principal balance of the loan on the date on
which the partial claim is made.
``(B) <<NOTE: Time period.>> In the case of an individual who failed
to make a payment on a loan guaranteed under this chapter during the
period beginning on March 1, 2020 and ending on May 1, 2025, the amount
of a partial claim under this section may not exceed 30 percent of the
unpaid principal balance of the guaranteed loan as of the date that the
initial partial claim is made.
``(2)(A) Subject to subparagraph (B), the Secretary may make only
one partial claim per loan.
``(B) The Secretary may make an additional partial claim on a loan
guaranteed under this chapter in the case of an individual who failed to
make a payment on such loan during--
``(i) a major disaster declared by the President under
section 401 of the Robert T. Stafford Disaster Relief and
Emergency Assistance Act (42 U.S.C. 5170); or
``(ii) <<NOTE: Time period.>> the period of 120 days
following such a major disaster.
``(3) An amount paid to the holder of a loan as a partial claim--
``(A) shall not count against the amount of a loan that may
otherwise be guaranteed under this chapter; and
``(B) may not be applied to the portion of the loan that is
guaranteed under this chapter.
``(4) <<NOTE: Applicability.>> A holder of a loan guaranteed under
such chapter for which the Secretary makes a partial claim under this
section shall apply the amount paid by the Secretary for the partial
claim first to arrearages, if any, on the guaranteed
loan. <<NOTE: Determination.>> Such arrearages may include any
additional costs (such as taxes, insurance premiums, or homeowner's
dues) the Secretary determines necessary to prevent or resolve a
default.
``(5) <<NOTE: Contracts.>> The Secretary may enter into a contract
with an appropriate entity for the service of a partial claim made by
the Secretary under this section. <<NOTE: Time period. Statements.>>
Any such contract shall provide that such entity shall provide quarterly
statements to the holder of the loan for which the Secretary makes the
partial claim.
``(d) <<NOTE: Records.>> Requirements of Loan Holder.--(1) The
Secretary may require the holder of a loan for which the Secretary makes
a partial claim under this section to take any actions necessary to
establish the partial claim, including preparing, executing,
transmitting, receiving, and recording loan documents.
``(2) <<NOTE: Determination.>> The Secretary shall compensate the
holder of such a loan appropriately, as determined by the Secretary, for
the services required of such holder under this subsection.
``(3) The Secretary may exercise the authority of the Secretary
under this subsection without regard to any other provision of
[[Page 139 STAT. 478]]
law not enacted expressly in limitation of this section that would
otherwise govern the expenditure of public funds.
``(e) Default and Foreclosure.--(1)(A) Notwithstanding section
3703(e) of this title, an individual who defaults on a loan for which
the Secretary makes a partial claim made under this section shall be
liable to the Secretary for any loss suffered by the Secretary resulting
from such default. Such a loss may be recovered in the same manner as
any other debt due the United States.
``(B) In the event of default by an individual on a loan for which
the Secretary makes a partial claim made under this section, the
Secretary may reduce the aggregate amount of guaranty or insurance
housing loan entitlement available to the individual under this chapter.
``(2) Notwithstanding section 2410(c) of title 28, an action to
foreclose a lien held by the United States arising under a partial claim
made under this section shall follow foreclosure procedures in
accordance with State or local law where the property involved is
located.
``(f) Decisions by the Secretary.--(1) Any partial claim made under
this section shall be made in the sole discretion of the Secretary and
on terms and conditions acceptable to the Secretary that are consistent
with this section.
``(2) Any decision by the Secretary under this section is final and
conclusive and is not subject to judicial review.
``(3) For purposes of section 511 of this title, any decision under
this section shall not be treated as a decision under a law that affects
the provision of benefits.
``(g) <<NOTE: Standards. Certification.>> Compliance.--(1) The
Secretary may establish standards for processing payments under this
section based on a certification by a holder of a loan guaranteed under
such chapter that the holder has complied with all applicable
requirements established by the Secretary.
``(2) <<NOTE: Audits.>> The Secretary shall carry out, on a random-
sampling basis, post-payment audits to ensure compliance with all
requirements under paragraph (1).
``(h) Guidance With Respect to Certain Loans.--(1) With respect to a
loan described in paragraph (2), the Secretary may--
``(A) before prescribing regulations, issue administrative
guidance regarding the making of a partial claim relating to
such loan; and
``(B) establish, through such guidance, additional
requirements applicable to such a partial claim.
``(2) <<NOTE: Determination.>> A loan described in this paragraph
is a loan that the Secretary determines was in default on the date of
the enactment of this section.
``(i) Rule of Construction.--Nothing in this section shall be
construed to limit the authority of the Secretary under subsections (a)
and (d) of section 3732 of this title.
``(j) Termination.--The Secretary may not make a partial claim under
this section after the date that is five years after the date of the
enactment of this section.''.
(b) Clerical Amendment.--The table of sections at the beginning of
such chapter <<NOTE: 38 USC prec. 3701.>> is amended by inserting after
the item relating to section 3736 the following new item:
``3737. Partial Claim Program.''.
[[Page 139 STAT. 479]]
SEC. 4. <<NOTE: Reports.>> STRATEGY OF THE SECRETARY OF VETERANS
AFFAIRS REGARDING THE EFFECT OF CERTAIN
LITIGATION.
Not later than 90 days after the date of the enactment of this Act,
the Secretary of Veterans Affairs shall submit to the Committees on
Veterans' Affairs of the Senate and House of Representatives a report on
the strategy of the Secretary to ensure that a veteran who seeks to
purchase a home with a loan guaranteed under chapter 37 of title 38,
United States Code, is not at a disadvantage when attempting to secure
representation by a real estate agent or broker. Such strategy may
include amendments to section 36.4313 of title 38, Code of Federal
Regulations.
SEC. 5. INCREASE OF AUTHORIZATION OF APPROPRIATIONS FOR
COMPREHENSIVE SERVICE PROGRAMS FOR HOMELESS
VETERANS.
Section 2016 of title 38, United States Code, is amended--
(1) in paragraph (7), by striking ``fiscal year 2015 and
each subsequent fiscal year'' and inserting ``each of fiscal
years 2015 through 2024''; and
(2) by adding at the end the following new paragraphs:
``(8) $344,000,000 for each of fiscal years 2025 and 2026.
``(9) $257,700,000 for each fiscal year thereafter through
fiscal year 2030.''.
Approved July 30, 2025.
LEGISLATIVE HISTORY--H.R. 1815:
---------------------------------------------------------------------------
HOUSE REPORTS: No. 119-104 (Comm. on Veterans' Affairs).
CONGRESSIONAL RECORD, Vol. 171 (2025):
May 19, considered and passed House.
July 15, considered and passed Senate.
DAILY COMPILATION OF PRESIDENTIAL DOCUMENTS (2025):
July 30, Presidential remarks.
<all>
Reported (Amended) by the Committee on Veterans' Affairs. H. Rept. 119-104.
Placed on the Union Calendar, Calendar No. 77.
Mr. Bost moved to suspend the rules and pass the bill, as amended.
Considered under suspension of the rules. (consideration: CR H2126-2129)
DEBATE - The House proceeded with forty minutes of debate on H.R. 1815.
Passed/agreed to in House: On motion to suspend the rules and pass the bill, as amended Agreed to by voice vote. (text: CR H2126-2127)
On motion to suspend the rules and pass the bill, as amended Agreed to by voice vote. (text: CR H2126-2127)
Motion to reconsider laid on the table Agreed to without objection.
Received in the Senate and Read twice and referred to the Committee on Veterans' Affairs.
Senate Committee on Veterans' Affairs discharged by Unanimous Consent.
Senate Committee on Veterans' Affairs discharged by Unanimous Consent.
Enacted as Public Law 119-31
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Passed/agreed to in Senate: Passed Senate without amendment by Voice Vote.
Passed Senate without amendment by Voice Vote. (consideration: CR S4373-4374)
Message on Senate action sent to the House.
Presented to President.
Presented to President.
Signed by President.
Signed by President.
Became Public Law No: 119-31.
Became Public Law No: 119-31.