119-s1921

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 1921 Introduced in Senate

    (IS) ]

<DOC>

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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