II 118th CONGRESS 2d Session S. 3728 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. Short title This Act may be cited as the Veterans Housing Stability Act of 2024 . 2. Modification of administration of housing loans of Department of Veterans Affairs to prevent or resolve default (a) Powers of Secretary Section 3720 of title 38, United States Code, is amended— (1) in subsection (f), by striking forebearance and inserting forbearance ; and (2) by adding at the end the following new subsection: (i) (1) Notwithstanding the provisions of any other law, including section 501(d) of this title, the Secretary may, in response to a national emergency declared by the President under the National Emergencies Act ( 50 U.S.C. 1601 et seq. ), 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 ), or a widespread and significant crisis as determined by the Secretary, take any of the following actions as the Secretary considers reasonably necessary to further the purposes of this chapter: (A) Impose a moratorium on the foreclosure of any loan guaranteed, insured, made, or held by the Secretary. (B) Impose a moratorium on any possessory action arising from the foreclosure of any such loan. (C) Impose a period of forbearance and establish related requirements with respect to any such loan. (2) (A) No moratorium or period of forbearance may be imposed under paragraph (1) for more than 180 days unless the Secretary extends such moratorium or period of forbearance as provided in subparagraph (A). (B) The Secretary may extend a moratorium or period of forbearance imposed under paragraph (1), or any previous extension of such a moratorium or period of forbearance, if the Secretary, not fewer than 30 days before extending such moratorium, period of forbearance, or previous extension— (i) notifies Congress of the extension; and (ii) publishes notice of the extension in the Federal Register. . (b) Partial claim program Subchapter III of chapter 37 of such title is amended by inserting after section 3722 the following new section: 3723. Partial Claim Program (a) In general The Secretary may 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 loan agreement to repay the Secretary at the end of the period of the guaranteed loan; and (3) the Secretary receives a secured interest in the property, subordinate to the first lien guaranteed loan, serving as collateral for the guaranteed loan. (c) Administration of partial claim (1) Amount of claim 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. (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 In the event of default by an individual under a partial claim made under this section, the Secretary may reduce the aggregate amount of guaranty or insurance housing loan entitlement available to the individual 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) Affect 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) Application to certain loans (1) In general With respect to loans described in paragraph (2), the Secretary may— (A) issue administrative guidance to make partial claims relating to such loans available under this section before prescribing regulations; and (B) establish through such guidance additional requirements applicable to such partial claims, which shall include the prohibition under subsection (c)(4). (2) Loan described A loan described in this paragraph is a loan that the Secretary determines was in default as of the date of the enactment of the Veterans Housing Stability Act of 2024 . (3) Termination The Secretary may not accept a request for a partial claim under this subsection after December 31, 2025. (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. . (c) Civil penalties Such subchapter is further amended by inserting after section 3723, as added by subsection (b), the following new section: 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. . (d) Procedure on default Section 3732 of such title 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 a secured interest in the property covered by the loan; 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 may 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. . (e) Clerical amendments 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. .