[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 7898 Introduced in House (IH)]
<DOC>
118th CONGRESS
2d Session
H. R. 7898
To amend title 38, United States Code, to modify the administration of
housing loans of the Department of Veterans Affairs to prevent or
resolve default under such loans, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
April 9, 2024
Mr. Deluzio (for himself and Mr. Moylan) introduced the following bill;
which was referred to the Committee on Veterans' Affairs
_______________________________________________________________________
A BILL
To amend title 38, United States Code, to modify the administration of
housing loans of the Department of Veterans Affairs to prevent or
resolve default under such loans, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Veterans Housing Stability Act of
2024''.
SEC. 2. MODIFICATION OF ADMINISTRATION OF HOUSING LOANS OF DEPARTMENT
OF VETERANS AFFAIRS TO PREVENT OR RESOLVE DEFAULT.
(a) Powers of Secretary.--Section 3720 of title 38, United States
Code, is amended--
(1) in subsection (f), by striking ``forebearance'' and
inserting ``forbearance''; and
(2) by adding at the end the following new subsection:
``(i)(1) Notwithstanding the provisions of any other law, including
section 501(d) of this title, the Secretary may, in response to a
national emergency declared by the President under the National
Emergencies Act (50 U.S.C. 1601 et seq.), 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 a widespread
and significant crisis as determined by the Secretary, take any of the
following actions as the Secretary considers reasonably necessary to
further the purposes of this chapter:
``(A) Impose a moratorium on the foreclosure of any loan
guaranteed, insured, made, or held by the Secretary.
``(B) Impose a moratorium on any possessory action arising
from the foreclosure of any such loan.
``(C) Impose a period of forbearance and establish related
requirements with respect to any such loan.
``(2)(A) No moratorium or period of forbearance may be imposed
under paragraph (1) for more than 180 days unless the Secretary extends
such moratorium or period of forbearance as provided in subparagraph
(A).
``(B) The Secretary may extend a moratorium or period of
forbearance imposed under paragraph (1), or any previous extension of
such a moratorium or period of forbearance, if the Secretary, not fewer
than 30 days before extending such moratorium, period of forbearance,
or previous extension--
``(i) notifies Congress of the extension; and
``(ii) publishes notice of the extension in the Federal
Register.''.
(b) Partial Claim Program.--Subchapter III of chapter 37 of such
title is amended by inserting after section 3722 the following new
section:
``Sec. 3723. Partial Claim Program
``(a) In General.--The Secretary may establish a program under this
section, to be known as the `Partial Claim Program', under which the
Secretary may make a partial claim with respect to a loan guaranteed
under this chapter if the Secretary determines that such loan is in
default or faces imminent default.
``(b) Partial Claim Defined.--In this section, the term `partial
claim', with respect to a loan guaranteed under this chapter, means the
purchase by the Secretary of a portion of indebtedness under the
guaranteed loan, under which--
``(1) the Secretary pays the holder of the guaranteed loan
the amount of indebtedness the Secretary determines necessary
to help prevent or resolve a default;
``(2) the borrower of the guaranteed loan enters into a
noninterest-bearing loan agreement to repay the Secretary at
the end of the period of the guaranteed loan; and
``(3) the Secretary receives a secured interest in the
property, subordinate to the first lien guaranteed loan,
serving as collateral for the guaranteed loan.
``(c) Administration of Partial Claim.--
``(1) Amount of claim.--The amount of a partial claim under
this section with respect to a loan guaranteed under this
chapter 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) Application of claim.--A holder of a loan guaranteed
under this chapter who receives a partial claim under this
section with respect to such loan shall apply the payment first
to arrearages, if any, on the guaranteed loan, which may
include any additional costs (such as taxes, insurance
premiums, or homeowner's dues) the Secretary determines
necessary to prevent or resolve a default.
``(3) No advance on loan guaranty.--The Secretary may not
structure a partial claim under this section as an advance on a
loan guaranty provided under this chapter.
``(4) Expenses.--Expenses related to a partial claim under
this section, including administrative expenses associated with
such partial claim, may not be charged to the borrower of the
guaranteed loan with respect to which the partial claim is
paid.
``(d) Requirements of Loan Holder.--
``(1) Agent of secretary.--The Secretary may require the
holder of a loan guaranteed under this chapter who receives a
partial claim under this section to service the partial claim
as an agent of the Secretary.
``(2) Establishment of claim.--The Secretary may require
the holder of a loan guaranteed under this chapter who receives
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.
``(3) Compensation of holder.--The Secretary shall
compensate the holder of a loan guaranteed under this chapter
who receives a partial claim under this section appropriately,
as determined by the Secretary, for the services required of
such holder under this subsection.
``(4) Exercise of powers.--The Secretary may exercise the
authority of the Secretary under this subsection without regard
to any other provision of law not enacted expressly in
limitation of this section that would otherwise govern the
expenditure of public funds.
``(e) Default and Foreclosure.--
``(1) Default.--
``(A) In general.--Notwithstanding section 3703(e)
of this title, an individual who defaults under a
partial claim made under this section shall be liable
to the Secretary for any loss suffered by the Secretary
resulting from such default, and such loss may be
recovered in the same manner as any other debt due the
United States.
``(B) Reduction of entitlement.--In the event of
default by an individual under 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) Foreclosure.--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) Sole discretion.--Any partial claim 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) Final and conclusive.--Any decision by the Secretary
under this section is final and conclusive and is not subject
to judicial review.
``(3) Affect on provision of benefits.--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) Compliance.--
``(1) Processing payments.--The Secretary may establish
standards for processing payments under this section 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.
``(2) Audits.--The Secretary shall carry out, on a random-
sampling basis, post-payment audits to ensure compliance with
all requirements described in paragraph (1).
``(h) Application to Certain Loans.--
``(1) In general.--With respect to loans described in
paragraph (2), the Secretary may--
``(A) issue administrative guidance to make partial
claims relating to such loans available under this
section before prescribing regulations; and
``(B) establish through such guidance additional
requirements applicable to such partial claims, which
shall include the prohibition under subsection (c)(4).
``(2) Loan described.--A loan described in this paragraph
is a loan that the Secretary determines was in default as of
the date of the enactment of the Veterans Housing Stability Act
of 2024.
``(3) Termination.--The Secretary may not accept a request
for a partial claim under this subsection after December 31,
2025.
``(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.''.
(c) Civil Penalties.--Such subchapter is further amended by
inserting after section 3723, as added by subsection (b), the following
new section:
``Sec. 3724. Civil penalties with respect to loan holders
``(a) In General.--Any holder of a loan guaranteed under this
chapter that knowingly and materially makes a false statement under
section 3723 or 3732 of this title shall be liable to the United States
Government for a civil penalty equal to the greater of--
``(1) two times the amount of the loss suffered by the
Secretary; or
``(2) another appropriate amount determined by the
Secretary, not to exceed $27,894.
``(b) Recovery.--A civil penalty under this section may be
recovered in the same manner as any other debt due the United States.
``(c) Additional Charges.--In assessing a civil penalty under this
section, the Secretary may charge administrative costs, fees, and
interest, as appropriate, in a manner similar to the interest and
administrative costs charged under section 5315 of this title.
``(d) Determinations.--All determinations necessary to carry out
this section shall be made by the Secretary.''.
(d) Procedure on Default.--Section 3732 of such title 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) The Secretary may, upon such terms and conditions as
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) 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 conclusive 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.
``(D)(i) 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) 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)(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) The Secretary may prescribe loss mitigation procedures,
including a mandatory sequence in which the holder of a loan guaranteed
under this chapter shall offer loss mitigation options to veterans, to
help prevent the foreclosure of any such loan.''.
(e) Clerical Amendments.--The table of sections at the beginning of
chapter 37 of title 38, United States Code, is amended by inserting
after the item relating to section 3722 the following new items:
``3723. Partial Claim Program.
``3724. Civil penalties with respect to loan holders.''.
<all>