SECTION 1. CONVERSION OF MULTIFAMILY TRANSITIONAL HOUSING LOAN PROGRAM 
              TO LOAN ISSUANCE PROGRAM.

    (a) Authority To Issue Loans.--
            (1) In general.--Section 2051 of title 38, United States 
        Code, is amended--
                    (A) in subsection (a)--
                            (i) by striking ``The'' and inserting ``(1) 
                        The''; and
                            (ii) by adding at the end the following new 
                        paragraph:
    ``(2) The Secretary shall, utilizing funds available in the 
Multifamily Transitional Housing Loan Program Revolving Fund under 
section 2055 of this title, issue not less than five loans that meet 
the requirements of this subchapter.'';
                    (B) in subsection (b)--
                            (i) in paragraph (1), by striking ``under 
                        subsection (a)'' and inserting ``under 
                        subsection (a)(1)'';
                            (ii) in paragraph (2), by striking ``under 
                        subsection (a)'' and inserting ``under 
                        subsection (a)(1)''; and
                            (iii) in paragraph (3), by inserting ``or 
                        issued'' after ``guaranteed'';
                    (C) in subsection (c), by inserting ``or issued'' 
                after ``guaranteed''; and
                    (D) in subsection (g), by inserting ``or issued'' 
                after ``guaranteed''.
            (2) Authority to delegate approval authority.--Subsection 
        (c) of such section, as amended by paragraph (1)(C) of this 
        subsection, is amended--
                    (A) by striking ``A loan'' and inserting ``(1) A 
                loan''; and
                    (B) by adding at the end the following new 
                paragraph:
    ``(2) The Secretary may delegate approval under paragraph (1) to a 
State or local government entity.''.
            (3) Sunset of authority to issue loan guarantees.--Such 
        section is further amended by adding at the end the following 
        new subsection:
    ``(h) The Secretary may not guarantee under subsection (a)(1) any 
loan that is closed after the date of the enactment of this subsection. 
The termination by this subsection of the authority to guarantee loans 
under this subsection shall not affect the validity of any loan 
guaranteed under this subchapter before the date of the enactment of 
this subsection and is in force on that date.''.
            (4) Conforming amendments.--
                    (A) Section 2052(d) of such title is amended by 
                inserting ``or issue'' after ``whether to guarantee''.
                    (B) Section 2053(a) of such title is amended by 
                inserting ``or issued'' after ``is guaranteed''.
                    (C) Section 2054(a) of such title is amended--
                            (i) in the first sentenced, by inserting 
                        ``or issued'' after ``guaranteed''; and
                            (ii) in the last sentence, by inserting 
                        ``or loan'' after ``guarantee''.
            (5) Clerical amendments.--
                    (A) The heading of subchapter VI of chapter 20 of 
                such title is amended by striking ``LOAN GUARANTEE 
                FOR''.
                    (B) The table of sections at the beginning of such 
                chapter is amended by striking the item relating to 
                subchapter VI and inserting the following new item:

          ``subchapter vi--multifamily transitional housing''.

    (b) Multifamily Transitional Housing Loan Program Revolving Fund.--
            (1) In general.--Subchapter VI of chapter 20 of such title 
        is amended by adding at the end the following new section:
``Sec. 2055. Multifamily Transitional Housing Loan Program Revolving 
              Fund
    ``(a) Establishment.--There is established in the Treasury of the 
United States a revolving fund known as the `Department of Veterans 
Affairs Multifamily Transitional Housing Loan Program Revolving Fund' 
(in this section referred to as the `Fund').
    ``(b) Elements.--There shall be deposited in the Fund the 
following, which shall constitute the assets of the Fund:
            ``(1) Amounts paid into the Fund under any provision of law 
        or regulation established by the Secretary imposing fees on 
        persons or entities issued a loan under this subchapter.
            ``(2) All other amounts received by the Secretary incident 
        to operations relating to the issuance of loans under this 
        subchapter, including--
                    ``(A) collections of principal and interest on 
                loans issued by the Secretary under this subchapter;
                    ``(B) proceeds from the sale, rental, use, or other 
                disposition of property acquired under this subchapter; 
                and
                    ``(C) penalties collected pursuant to this 
                subchapter.
            ``(3) Amounts appropriated or otherwise made available 
        before the date of the enactment of this section for purposes 
        of activities under this subchapter, including amounts 
        appropriated for such purposes under title I of the Department 
        of Veterans Affairs and Housing and Urban Development, and 
        Independent Agencies Appropriations Act, 2000 (Public Law 106-
        74; 113 Stat. 1049).
    ``(c) Use of Funds.--The Fund shall be available to the Secretary, 
without fiscal year limitation, for all operations relating to the 
issuance of loans under this subchapter, consistent with the Federal 
Credit Reform Act of 1990 (2 U.S.C. 661 et seq.).''.
            (2) Clerical amendment.--The table of sections at the 
        beginning of chapter 20 of such title is amended by inserting 
        after the item relating to section 2054 the following new item:

``2055. Multifamily Transitional Housing Loan Program Revolving 
                            Fund.''.
    (c) Clarification of Authority To Determine Terms and Conditions of 
Loans.--Subsection (a)(6) of section 2052 of such title is amended by 
inserting ``including with respect to forbearance, deferral, and loan 
forgiveness,'' after ``determines are reasonable,''.
    (d) Clarification of Types of Spaces That May Be Included in 
Covered Multifamily Transitional Housing Projects.--Subsection (c)(1) 
of such section 2052 is amended by striking ``or job training 
programs'' and inserting ``job training programs, other types of 
residential units, or other uses that the Secretary considers necessary 
for the sustainability of the project''.
    (e) Loan Defaults.--Section 2053 of such title is amended by adding 
at the end the following new subsection:
    ``(c) The Secretary may impose such penalties or require such 
collateral as the Secretary considers necessary--
            ``(1) to discourage default on a loan issued under this 
        subchapter; or
            ``(2) to mitigate harm to the Department from default on a 
        loan issued under this subchapter.
    ``(d) The Secretary shall administer any property coming under the 
jurisdiction of the Secretary by reason of default on a loan issued or 
guaranteed under this subchapter in accordance with regulations 
prescribed by the Secretary for that purpose. Such administration of 
property may include selling, renting, or otherwise disposing of 
property as the Secretary considers appropriate.''.
    (f) Preferential Treatment of Veterans.--
            (1) In general.--Subchapter VI of chapter 20 of such title, 
        as amended by subsection (b), is further amended by adding at 
        the end the following new section:
``Sec. 2056. Preferential treatment of veterans
    ``No provision of Federal or State law may prohibit a multifamily 
transitional housing project described in section 2052(b) of this title 
from offering preferential treatment to veterans.''.
            (2) Clerical amendment.--The table of sections at the 
        beginning of such chapter, as amended by subsection (b), is 
        further amended by adding at the end the following new item:

``2056. Preferential treatment of veterans.''.
    (g) Technical Corrections.--Section 2052 of such title is amended--
            (1) in subsection (b)(2), by striking ``counselling'' both 
        places it appears and inserting ``counseling''; and
            (2) in subsection (d)(2), by striking ``, as assessed under 
        section 107 of Public Law 102-405''.
Revises the Department of Veterans Affairs (VA) multifamily transitional housing loan program (program) to require the Secretary of Veterans Affairs to issue at least five loans for the construction, rehabilitation, or acquisition of land for multifamily transitional housing projects. Authorizes the Secretary to delegate loan approval authority to a state or local government entity.

Terminates, as of the date of enactment of this Act, the Secretary's authority under the program to guarantee loans for such purposes.

Establishes the Department of Veterans Affairs Multifamily Transitional Housing Loan Program Revolving Fund to fund such loans.

Prohibits any federal or state law from prohibiting a program project offering preferential treatment to veterans.
A bill to amend title 38, United States Code, to improve the multifamily transitional housing loan program of the Department of Veterans Affairs by requiring the Secretary of Veterans Affairs to issue loans for the construction of, rehabilitation of, or acquisition of land for multifamily transitional housing projects instead of guaranteeing loans for such purposes, and for other purposes.