[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 1921 Introduced in Senate (IS)]
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119th CONGRESS
1st Session
S. 1921
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 SENATE OF THE UNITED STATES
May 22, 2025
Ms. Blunt Rochester (for herself and Mr. Rounds) introduced the
following bill; which was read twice and 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
2025''.
SEC. 2. MODIFICATION OF ADMINISTRATION OF HOUSING LOANS OF DEPARTMENT
OF VETERANS AFFAIRS TO PREVENT OR RESOLVE DEFAULT.
(a) Partial Claim Program.--Subchapter III of chapter 37 of title
38, United States Code, is amended by inserting after section 3722 the
following new section:
``Sec. 3723. Partial Claim Program
``(a) In General.--The Secretary shall 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 agreement to repay the portion of
indebtedness at loan maturity; and
``(3) the Secretary receives--
``(A) a secured interest in the property,
subordinate to the first lien guaranteed loan, serving
as collateral for the guaranteed loan; or
``(B) agreement from the holder to remit to the
Secretary the portion of indebtedness reimbursed by the
borrower to the holder.
``(c) Administration of Partial Claim.--
``(1) Amount of claim.--
``(A) In general.--Except as provided in
subparagraphs (B) and (C), the amount of a partial
claim under this section with respect to a loan
guaranteed under this chapter may not exceed 25 percent
of the unpaid principal balance of the guaranteed loan
as of the date that the initial partial claim is made.
``(B) Certain individuals.--In the case of an
individual who was delinquent on the date of the
enactment of the Veterans Housing Stability Act of
2025, 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.
``(C) Disasters.--In response to 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), the Secretary may
increase the cap specified in subparagraph (A) to 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.--Once an individual
has entered into a partial claim and until that partial
claim has been fully repaid, the Secretary shall reduce
the aggregate amount of guaranty or insurance housing
loan entitlement available to the individual, for any
new mortgage loan, 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) Effect 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) Administrative Guidance.--
``(1) In general.--The Secretary may implement the Partial
Claim Program through administrative guidance for a period of
not more than three years beginning on the date on which the
Secretary establishes the program.
``(2) Extension.--The Secretary may extend the period
described in paragraph (1) based on programmatic or budgetary
considerations.
``(3) Additional requirements.--The Secretary may establish
through administrative guidance described in paragraph (1)
additional requirements applicable to partial claims under this
section, which shall include the prohibition under subsection
(c)(4).
``(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.''.
(b) Civil Penalties.--Such subchapter is further amended by
inserting after section 3723, as added by subsection (a), 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.''.
(c) Procedure on Default.--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) 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--
``(I) a secured interest in the property covered by
the loan; or
``(II) agreement from the holder to remit to the
Secretary the portion of indebtedness reimbursed by the
borrower to the holder; 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 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 to veterans, to
help prevent the foreclosure of any such loan.''.
(d) Foreclosure Guidance.--The Secretary of Veterans Affairs shall
strongly encourage holders of loans guaranteed under chapter 37 of
title 38, United States Code, to implement a moratorium on foreclosures
of such loans until the Partial Claim Program established under section
3732 of title 38, United States Code, as added by subsection (a), is
fully operational.
(e) Clerical Amendment.--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.''.
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