I 

118TH CONGRESS 

2D SESSION H. R. 8647 

To amend title 38, United States Code, to authorize the Secretary of Veterans 

Affairs to take certain actions to prevent or resolve a default of a 

housing loan guaranteed by the Secretary, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

JUNE 5, 2024 

Mr. VAN ORDEN (for himself and Mr. ALFORD) introduced the following bill; 

which was referred to the Committee on Veterans’ Affairs 

A BILL 

To amend title 38, United States Code, to authorize the 

Secretary of Veterans Affairs to take certain actions 

to prevent or resolve a default of a housing loan guaranteed by the Secretary, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘VA Home Loan Pro5 gram Reform Act’’. 


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1 SEC. 2. AUTHORITY OF THE SECRETARY OF VETERANS AF2 FAIRS TO TAKE CERTAIN ACTIONS IN THE 

3 CASE OF A DEFAULT ON A HOME LOAN GUAR4 ANTEED BY THE SECRETARY. 

5 Section 3732 of title 38, United States Code, is 

6 amended— 

7 (1) in subsection (a)— 

8 (A) in paragraph (1), by striking ‘‘obliga9 tion’’ each place it appears and inserting 

10 ‘‘loan’’; 

11 (B) in paragraph (2)— 

12 (i) by amending subparagraph (A) to 

13 read as follows: 

14 ‘‘(A) The Secretary may, under terms and conditions 

15 as determined by the Secretary— 

16 ‘‘(i) pay the holder of a loan guaranteed under 

17 this chapter an amount necessary to avoid the fore18 closure of such loan; 

19 ‘‘(ii) require the holder of the loan and the vet20 eran obligated on the loan to execute all documents 

21 necessary to ensure the Secretary obtains a secured 

22 interest in the property covered by the loan; and 

23 ‘‘(iii) require the holder of the loan to take any 

24 actions necessary to carry out this paragraph, in25 cluding preparing, executing, transmitting, receiving, 


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1 and recording documents, and requiring the holder 

2 of the loan to place the loan in forbearance.’’; 

3 (ii) in subparagraph (B), by striking 

4 ‘‘obligation’’ each place it appears and in5 serting ‘‘housing loan’’; and 

6 (iii) by adding at the end the fol7 lowing new subparagraphs: 

8 ‘‘(C)(i) Any decision by the Secretary under this 

9 paragraph is final and is not subject to judicial review. 

10 ‘‘(ii) For purposes of section 511 of this title, any 

11 decision under this paragraph shall not be treated as a 

12 decision under a law that affects the provision of benefits. 

13 ‘‘(D)(i) The Secretary may establish standards for 

14 processing payments under this paragraph based on a cer15 tification by a holder of a loan guaranteed under this 

16 chapter that the holder has complied with all applicable 

17 requirements established by the Secretary. 

18 ‘‘(ii) The Secretary shall carry out, on a random-sam19 pling basis, post-payment audits to ensure compliance 

20 with all requirements described in clause (i).’’; and 

21 (C) in paragraph (5), by striking ‘‘obliga22 tion’’ and inserting ‘‘loan’’; 

23 (2) in subsection (c)(10)(B)(i), by striking 

24 ‘‘forebearance’’ each place it appears and inserting 

25 ‘‘forbearance’’; and 


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1 (3) by adding at the end the following new sub2 section: 

3 ‘‘(d) The Secretary may prescribe loss mitigation pro4 cedures, including a mandatory sequence in which the 

5 holder of a loan guaranteed under this chapter shall offer 

6 loss mitigation options to veterans, to help prevent the 

7 foreclosure of any such loan.’’. 

8 SEC. 3. PARTIAL CLAIM PROGRAM OF THE DEPARTMENT 

9 OF VETERANS AFFAIRS. 

10 (a) ESTABLISHMENT.—The Secretary of Veterans 

11 Affairs shall carry out a program, to be known as the 

12 ‘‘Partial Claim Program’’, under which the Secretary may 

13 make a partial claim, described in subsection (b), with re14 spect to a loan guaranteed under chapter 37 of title 38, 

15 United States Code, if the Secretary determines that such 

16 loan is in default or at imminent risk of default. 

17 (b) PARTIAL CLAIM DESCRIBED.—A patrial claim 

18 described in this subsection is the purchase by the Sec19 retary of a portion of indebtedness under the guaranteed 

20 loan, under which— 

21 (1) the borrower of the guaranteed loan enters 

22 into an agreement under subsection (c); 

23 (2) the Secretary pays the holder of the guaran24 teed loan the amount of indebtedness the Secretary 


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1 determines necessary to help prevent or resolve a de2 fault; and 

3 (3) the Secretary receives a secured interest in 

4 the property, subordinate to the first lien guaranteed 

5 loan, serving as collateral for the guaranteed loan. 

6 (c) AGREEMENT BETWEEN BORROWER AND SEC7 RETARY.—An agreement under this subsection is an 

8 agreement by the borrower of the guaranteed loan to repay 

9 the Secretary the amount determined under subsection 

10 (b)(2) at the end of the period of such guaranteed loan, 

11 subject to the following annual interest: 

12 (1) If the borrower agrees to make monthly 

13 payments beginning not later than one year after the 

14 date on which the Secretary makes the payment 

15 under subsection (b)(2), 0 percent. 

16 (2) If the borrower does not agree to a repay17 ment plan under paragraph (1), or fails to comply 

18 with such a repayment plan, 0.5 percent. 

19 (d) ADMINISTRATION OF PARTIAL CLAIM.— 

20 (1) AMOUNT OF CLAIM.—The amount of a par21 tial claim under this section with respect to a loan 

22 guaranteed under such chapter may not exceed 20 

23 percent of the unpaid principal balance of the guar24 anteed loan on the date on which the partial claim 

25 is made. 


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1 (2) APPLICATION OF CLAIM.—A holder of a 

2 loan guaranteed under such chapter who receives a 

3 partial claim under this section with respect to such 

4 loan shall apply the payment first to arrearages, if 

5 any, on the guaranteed loan, which may include any 

6 additional costs (such as taxes, insurance premiums, 

7 or homeowner’s dues) the Secretary determines nec8 essary to prevent or resolve a default. 

9 (e) REQUIREMENTS OF LOAN HOLDER.— 

10 (1) AGENT OF SECRETARY.—The Secretary 

11 may require the holder of a loan guaranteed under 

12 such chapter who receives a partial claim under this 

13 section to service the partial claim as an agent of 

14 the Secretary. 

15 (2) ESTABLISHMENT OF CLAIM.—The Sec16 retary may require the holder of a loan guaranteed 

17 under such chapter who receives a partial claim 

18 under this section to take any actions necessary to 

19 establish the partial claim, including preparing, exe20 cuting, transmitting, receiving, and recording loan 

21 documents. 

22 (3) COMPENSATION OF HOLDER.—The Sec23 retary shall compensate the holder of a loan guaran24 teed under such chapter who receives a partial claim 

25 under this section appropriately, as determined by 


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1 the Secretary, for the services required of such hold2 er under this subsection. 

3 (4) EXERCISE OF POWERS.—The Secretary 

4 may exercise the authority of the Secretary under 

5 this subsection without regard to any other provision 

6 of law not enacted expressly in limitation of this sec7 tion that would otherwise govern the expenditure of 

8 public funds. 

9 (f) DEFAULT AND FORECLOSURE.— 

10 (1) DEFAULT.— 

11 (A) IN GENERAL.—Notwithstanding sec12 tion 3703(e) of title 38, United States Code, an 

13 individual who defaults under a partial claim 

14 made under this section shall be liable to the 

15 Secretary for any loss suffered by the Secretary 

16 resulting from such default, and such loss may 

17 be recovered in the same manner as any other 

18 debt due the United States. 

19 (B) REDUCTION OF ENTITLEMENT.—In 

20 the event of default by an individual under a 

21 partial claim made under this section, the Sec22 retary may reduce the aggregate amount of 

23 guaranty or insurance housing loan entitlement 

24 available to the individual under such chapter. 


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1 (2) FORECLOSURE.—Notwithstanding section 

2 2410(c) of title 28, United States Code, an action to 

3 foreclose a lien held by the United States arising 

4 under a partial claim made under this section shall 

5 follow foreclosure procedures in accordance with 

6 State or local law where the property involved is lo7 cated. 

8 (g) DECISIONS BY THE SECRETARY.— 

9 (1) SOLE DISCRETION.—Any partial claim 

10 under this section shall be made in the sole discre11 tion of the Secretary and on terms and conditions 

12 acceptable to the Secretary that are consistent with 

13 this section. 

14 (2) FINAL AND CONCLUSIVE.—Any decision by 

15 the Secretary under this section is final and conclu16 sive and is not subject to judicial review. 

17 (3) AFFECT ON PROVISION OF BENEFITS.—For 

18 purposes of section 511 of title 38, United States 

19 Code, any decision under this section shall not be 

20 treated as a decision under a law that affects the 

21 provision of benefits. 

22 (h) COMPLIANCE.— 

23 (1) PROCESSING PAYMENTS.—The Secretary 

24 may establish standards for processing payments 

25 under this section based on a certification by a holdVerDate Sep 11 2014 20:00 Jul 22, 2024 Jkt 049200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H8647.IH H8647

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1 er of a loan guaranteed under such chapter that the 

2 holder has complied with all applicable requirements 

3 established by the Secretary. 

4 (2) AUDITS.—The Secretary shall carry out, on 

5 a random-sampling basis, post-payment audits to en6 sure compliance with all requirements described in 

7 paragraph (1). 

8 (i) GUIDANCE WITH RESPECT TO CERTAIN

9 LOANS.— 

10 (1) IN GENERAL.—With respect to a loan de11 scribed in paragraph (2), the Secretary may— 

12 (A) before prescribing regulations, issue 

13 administrative guidance regarding the making 

14 of a partial claim relating to such loan; and 

15 (B) establish, through such guidance, addi16 tional requirements applicable to such a partial 

17 claim. 

18 (2) LOAN DESCRIBED.—A loan described in this 

19 paragraph is a loan that the Secretary determines 

20 was in default on the date of the enactment of this 

21 Act. 

22 (j) RULE OF CONSTRUCTION.—Nothing in this sec23 tion shall be construed to limit the authority of the Sec24 retary under subsections (a) and (d) of section 3732 of 


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1 title 38, United States Code, as amended by section 2 of 

2 this Act. 

3 (k) TERMINATION.—The Secretary may not make a 

4 partial claim under this section after September 30, 2026. 

5 SEC. 4. STRATEGY OF THE SECRETARY OF VETERANS AF6 FAIRS REGARDING HOME LOANS IN LIGHT OF 

7 CERTAIN LITIGATION. 

8 Not later than 90 days after the date of the enact9 ment of this Act, the Secretary of Veterans Affairs shall 

10 submit to the Committees on Veterans’ Affairs of the Sen11 ate and House of Representatives a report on the strategy 

12 of the Secretary to ensure that a veteran who seeks to 

13 purchase a home with a loan guaranteed under chapter 

14 37 of title 38, United States Code, is not at a disadvan15 tage, arising from the decision in Burnett v. The National 

16 Association of Realtors (4:19–cv–00332–SRB (W.D. Mo. 

17 Dec. 16, 2022)), when attempting to secure representation 

18 by a real estate agent or broker. Such strategy may in19 clude amendments to section 36.4313 of title 38, Code of 

20 Federal Regulations. 

Æ 


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