II 

118TH CONGRESS 

2D SESSION S. 3728 

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 

FEBRUARY 1, 2024 

Mr. TESTER (for himself and Mr. BROWN) 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. 

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 ‘‘Veterans Housing Sta5 bility Act of 2024’’. 


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1 SEC. 2. MODIFICATION OF ADMINISTRATION OF HOUSING 

2 LOANS OF DEPARTMENT OF VETERANS AF3 FAIRS TO PREVENT OR RESOLVE DEFAULT. 

4 (a) POWERS OF SECRETARY.—Section 3720 of title 

5 38, United States Code, is amended— 

6 (1) in subsection (f), by striking ‘‘forebearance’’ 

7 and inserting ‘‘forbearance’’; and 

8 (2) by adding at the end the following new sub9 section: 

10 ‘‘(i)(1) Notwithstanding the provisions of any other 

11 law, including section 501(d) of this title, the Secretary 

12 may, in response to a national emergency declared by the 

13 President under the National Emergencies Act (50 U.S.C. 

14 1601 et seq.), a major disaster declared by the President 

15 under section 401 of the Robert T. Stafford Disaster Re16 lief and Emergency Assistance Act (42 U.S.C. 5170), or 

17 a widespread and significant crisis as determined by the 

18 Secretary, take any of the following actions as the Sec19 retary considers reasonably necessary to further the pur20 poses of this chapter: 

21 ‘‘(A) Impose a moratorium on the foreclosure of 

22 any loan guaranteed, insured, made, or held by the 

23 Secretary. 

24 ‘‘(B) Impose a moratorium on any possessory 

25 action arising from the foreclosure of any such loan. 


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1 ‘‘(C) Impose a period of forbearance and estab2 lish related requirements with respect to any such 

3 loan. 

4 ‘‘(2)(A) No moratorium or period of forbearance may 

5 be imposed under paragraph (1) for more than 180 days 

6 unless the Secretary extends such moratorium or period 

7 of forbearance as provided in subparagraph (A). 

8 ‘‘(B) The Secretary may extend a moratorium or pe9 riod of forbearance imposed under paragraph (1), or any 

10 previous extension of such a moratorium or period of for11 bearance, if the Secretary, not fewer than 30 days before 

12 extending such moratorium, period of forbearance, or pre13 vious extension— 

14 ‘‘(i) notifies Congress of the extension; and 

15 ‘‘(ii) publishes notice of the extension in the 

16 Federal Register.’’. 

17 (b) PARTIAL CLAIM PROGRAM.—Subchapter III of 

18 chapter 37 of such title is amended by inserting after sec19 tion 3722 the following new section: 

20 ‘‘§ 3723. Partial Claim Program 

21 ‘‘(a) IN GENERAL.—The Secretary may establish a 

22 program under this section, to be known as the ‘Partial 

23 Claim Program’, under which the Secretary may make a 

24 partial claim with respect to a loan guaranteed under this 


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1 chapter if the Secretary determines that such loan is in 

2 default or faces imminent default. 

3 ‘‘(b) PARTIAL CLAIM DEFINED.—In this section, the 

4 term ‘partial claim’, with respect to a loan guaranteed 

5 under this chapter, means the purchase by the Secretary 

6 of a portion of indebtedness under the guaranteed loan, 

7 under which— 

8 ‘‘(1) the Secretary pays the holder of the guar9 anteed loan the amount of indebtedness the Sec10 retary determines necessary to help prevent or re11 solve a default; 

12 ‘‘(2) the borrower of the guaranteed loan enters 

13 into a noninterest-bearing loan agreement to repay 

14 the Secretary at the end of the period of the guaran15 teed loan; and 

16 ‘‘(3) the Secretary receives a secured interest in 

17 the property, subordinate to the first lien guaranteed 

18 loan, serving as collateral for the guaranteed loan. 

19 ‘‘(c) ADMINISTRATION OF PARTIAL CLAIM.— 

20 ‘‘(1) AMOUNT OF CLAIM.—The amount of a 

21 partial claim under this section with respect to a 

22 loan guaranteed under this chapter may not exceed 

23 30 percent of the unpaid principal balance of the 

24 guaranteed loan as of the date that the initial par25 tial claim is made. 


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

2 loan guaranteed under this 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 ‘‘(3) NO ADVANCE ON LOAN GUARANTY.—The 

10 Secretary may not structure a partial claim under 

11 this section as an advance on a loan guaranty pro12 vided under this chapter. 

13 ‘‘(4) EXPENSES.—Expenses related to a partial 

14 claim under this section, including administrative ex15 penses associated with such partial claim, may not 

16 be charged to the borrower of the guaranteed loan 

17 with respect to which the partial claim is paid. 

18 ‘‘(d) REQUIREMENTS OF LOAN HOLDER.— 

19 ‘‘(1) AGENT OF SECRETARY.—The Secretary 

20 may require the holder of a loan guaranteed under 

21 this chapter who receives a partial claim under this 

22 section to service the partial claim as an agent of 

23 the Secretary. 

24 ‘‘(2) ESTABLISHMENT OF CLAIM.—The Sec25 retary may require the holder of a loan guaranteed 


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1 under this chapter who receives a partial claim 

2 under this section to take any actions necessary to 

3 establish the partial claim, including preparing, exe4 cuting, transmitting, receiving, and recording loan 

5 documents. 

6 ‘‘(3) COMPENSATION OF HOLDER.—The Sec7 retary shall compensate the holder of a loan guaran8 teed under this chapter who receives a partial claim 

9 under this section appropriately, as determined by 

10 the Secretary, for the services required of such hold11 er under this subsection. 

12 ‘‘(4) EXERCISE OF POWERS.—The Secretary 

13 may exercise the authority of the Secretary under 

14 this subsection without regard to any other provision 

15 of law not enacted expressly in limitation of this sec16 tion that would otherwise govern the expenditure of 

17 public funds. 

18 ‘‘(e) DEFAULT AND FORECLOSURE.— 

19 ‘‘(1) DEFAULT.— 

20 ‘‘(A) IN GENERAL.—Notwithstanding sec21 tion 3703(e) of this title, an individual who de22 faults under a partial claim made under this 

23 section shall be liable to the Secretary for any 

24 loss suffered by the Secretary resulting from 

25 such default, and such loss may be recovered in 


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1 the same manner as any other debt due the 

2 United States. 

3 ‘‘(B) REDUCTION OF ENTITLEMENT.—In 

4 the event of default by an individual under a 

5 partial claim made under this section, the Sec6 retary may reduce the aggregate amount of 

7 guaranty or insurance housing loan entitlement 

8 available to the individual under this chapter. 

9 ‘‘(2) FORECLOSURE.—Notwithstanding section 

10 2410(c) of title 28, an action to foreclose a lien held 

11 by the United States arising under a partial claim 

12 made under this section shall follow foreclosure pro13 cedures in accordance with State or local law where 

14 the property involved is located. 

15 ‘‘(f) DECISIONS BY THE SECRETARY.— 

16 ‘‘(1) SOLE DISCRETION.—Any partial claim 

17 under this section shall be made in the sole discre18 tion of the Secretary and on terms and conditions 

19 acceptable to the Secretary that are consistent with 

20 this section. 

21 ‘‘(2) FINAL AND CONCLUSIVE.—Any decision by 

22 the Secretary under this section is final and conclu23 sive and is not subject to judicial review. 

24 ‘‘(3) AFFECT ON PROVISION OF BENEFITS.— 

25 For purposes of section 511 of this title, any deciVerDate Sep 11 2014 20:53 Feb 06, 2024 Jkt 049200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S3728.IS S3728

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1 sion under this section shall not be treated as a deci2 sion under a law that affects the provision of bene3 fits. 

4 ‘‘(g) COMPLIANCE.— 

5 ‘‘(1) PROCESSING PAYMENTS.—The Secretary 

6 may establish standards for processing payments 

7 under this section based on a certification by a hold8 er of a loan guaranteed under this chapter that the 

9 holder has complied with all applicable requirements 

10 established by the Secretary. 

11 ‘‘(2) AUDITS.—The Secretary shall carry out, 

12 on a random-sampling basis, post-payment audits to 

13 ensure compliance with all requirements described in 

14 paragraph (1). 

15 ‘‘(h) APPLICATION TO CERTAIN LOANS.— 

16 ‘‘(1) IN GENERAL.—With respect to loans de17 scribed in paragraph (2), the Secretary may— 

18 ‘‘(A) issue administrative guidance to 

19 make partial claims relating to such loans avail20 able under this section before prescribing regu21 lations; and 

22 ‘‘(B) establish through such guidance addi23 tional requirements applicable to such partial 

24 claims, which shall include the prohibition 

25 under subsection (c)(4). 


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1 ‘‘(2) LOAN DESCRIBED.—A loan described in 

2 this paragraph is a loan that the Secretary deter3 mines was in default as of the date of the enactment 

4 of the Veterans Housing Stability Act of 2024. 

5 ‘‘(3) TERMINATION.—The Secretary may not 

6 accept a request for a partial claim under this sub7 section after December 31, 2025. 

8 ‘‘(i) RULE OF CONSTRUCTION.—Nothing in this sec9 tion shall be construed to limit the authority of the Sec10 retary under subsections (a) and (d) of section 3732 of 

11 this title.’’. 

12 (c) CIVIL PENALTIES.—Such subchapter is further 

13 amended by inserting after section 3723, as added by sub14 section (b), the following new section: 

15 ‘‘§ 3724. Civil penalties with respect to loan holders 

16 ‘‘(a) IN GENERAL.—Any holder of a loan guaranteed 

17 under this chapter that knowingly and materially makes 

18 a false statement under section 3723 or 3732 of this title 

19 shall be liable to the United States Government for a civil 

20 penalty equal to the greater of— 

21 ‘‘(1) two times the amount of the loss suffered 

22 by the Secretary; or 

23 ‘‘(2) another appropriate amount determined by 

24 the Secretary, not to exceed $27,894. 


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1 ‘‘(b) RECOVERY.—A civil penalty under this section 

2 may be recovered in the same manner as any other debt 

3 due the United States. 

4 ‘‘(c) ADDITIONAL CHARGES.—In assessing a civil 

5 penalty under this section, the Secretary may charge ad6 ministrative costs, fees, and interest, as appropriate, in a 

7 manner similar to the interest and administrative costs 

8 charged under section 5315 of this title. 

9 ‘‘(d) DETERMINATIONS.—All determinations nec10 essary to carry out this section shall be made by the Sec11 retary.’’. 

12 (d) PROCEDURE ON DEFAULT.—Section 3732 of 

13 such title is amended— 

14 (1) in subsection (a)— 

15 (A) in paragraph (1), by striking ‘‘obliga16 tion’’ each place it appears and inserting 

17 ‘‘loan’’; 

18 (B) in paragraph (2)— 

19 (i) by amending subparagraph (A) to 

20 read as follows: 

21 ‘‘(A) The Secretary may, upon such terms and condi22 tions as determined by the Secretary— 

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

24 this chapter an amount necessary to avoid the fore25 closure of such loan; 


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1 ‘‘(ii) require the holder of the loan and the vet2 eran obligated on the loan to execute all documents 

3 necessary to ensure the Secretary obtains a secured 

4 interest in the property covered by the loan; and 

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

6 actions necessary to carry out this paragraph, in7 cluding preparing, executing, transmitting, receiving, 

8 and recording documents, and requiring the holder 

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

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

11 ‘‘obligation’’ each place it appears and in12 serting ‘‘housing loan’’; and 

13 (iii) by adding at the end the fol14 lowing new subparagraphs: 

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

16 paragraph is final and conclusive and is not subject to ju17 dicial review. 

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

19 decision under this paragraph shall not be treated as a 

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

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

22 processing payments under this paragraph based on a cer23 tification by a holder of a loan guaranteed under this 

24 chapter that the holder has complied with all applicable 

25 requirements established by the Secretary. 


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1 ‘‘(ii) The Secretary shall carry out, on a random-sam2 pling basis, post-payment audits to ensure compliance 

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

4 (C) in paragraph (5), by striking ‘‘obliga5 tion’’ and inserting ‘‘loan’’; 

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

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

8 ‘‘forbearance’’; and 

9 (3) by adding at the end the following new sub10 section: 

11 ‘‘(d) The Secretary may prescribe loss mitigation pro12 cedures, including a mandatory sequence in which the 

13 holder of a loan guaranteed under this chapter shall offer 

14 loss mitigation options to veterans, to help prevent the 

15 foreclosure of any such loan.’’. 

16 (e) CLERICAL AMENDMENTS.—The table of sections 

17 at the beginning of chapter 37 of title 38, United States 

18 Code, is amended by inserting after the item relating to 

19 section 3722 the following new items: 

‘‘3723. Partial Claim Program. 

‘‘3724. Civil penalties with respect to loan holders.’’. 

Æ 


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