VA Home Loan Program Reform Act
VA Home Loan Program Reform Act
Plain Language Summary
# VA Home Loan Program Reform Act (HR 1815) - Summary **What the Bill Does** This law gives the Department of Veterans Affairs new tools to help veterans avoid losing their homes to foreclosure. The VA can now pay lenders money to prevent foreclosure and can purchase portions of defaulted loans to help veterans catch up on payments. The bill requires the VA to try specific loss prevention strategies before allowing loan modifications, and creates a five-year program where the VA can make "partial claims"—essentially buying part of a veteran's debt to help them stay in their home. **Who It Affects** The law primarily helps veterans who have VA-backed home loans and are struggling with payments. It also affects mortgage lenders and the VA, which gains authority and responsibility to intervene in default situations.
The program applies only to primary residences, not investment properties. **Key Provisions** The VA must follow a specific sequence of loss mitigation options before taking other administrative actions, ensuring borrowers get help through structured steps. The partial claim program lasts five years, allowing the VA to purchase portions of troubled loans. When the VA intervenes to prevent foreclosure, it gains a legal claim on the property as security. **Status:** This bill has been signed into law and is now active.
CRS Official Summary
VA Home Loan Program Reform ActThis bill authorizes the Department of Veterans Affairs (VA) to take certain actions in cases of default on home loans under the VA home loan program and establishes a partial claim program.First, the bill authorizes the VA to pay the holder of a loan guaranteed by the VA an amount necessary to avoid the foreclosure of the loan, provided that the holder of the loan and the veteran obligated on the loan execute documents to ensure the VA obtains a secured interest in the property covered by the loan.The VA must prescribe loss mitigation procedures to help prevent the foreclosure of such a home loan. The VA may not take specified administrative actions (e.g., consent to the modification of loan terms) until the sequence of mitigation options has been completed.Next, the bill establishes a five-year Partial Claim Program under which the VA may make a partial claim (purchase a portion of the indebtedness) on VA loans for primary residences that are in default or at imminent risk of default. Individuals who default on loans for which the VA has made a partial claim under this program must be liable to the VA for any loss resulting from the default.Finally, the VA must report to Congress on its strategy to ensure that veterans who purchase homes under the VA home loan program are not at a disadvantage when attempting to secure representation by a real estate agent or broker.
Latest Action
Became Public Law No: 119-31.