S1921-119

1. Short title This Act may be cited as the Veterans Housing Stability Act of 2025.

2. Modification of administration of housing loans of Department of Veterans Affairs to prevent or resolve default Subchapter III of chapter 37 of title 38, United States Code, is amended by inserting after section 3722 the following new section: The Secretary shall 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. 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— the Secretary pays the holder of the guaranteed loan the amount of indebtedness the Secretary determines necessary to help prevent or resolve a default; the borrower of the guaranteed loan enters into a noninterest-bearing agreement to repay the portion of indebtedness at loan maturity; and the Secretary receives— a secured interest in the property, subordinate to the first lien guaranteed loan, serving as collateral for the guaranteed loan; or agreement from the holder to remit to the Secretary the portion of indebtedness reimbursed by the borrower to the holder. Except as provided in subparagraphs (B) and (C), the amount of a partial claim under this section with respect to a loan guaranteed under this chapter may not exceed 25 percent of the unpaid principal balance of the guaranteed loan as of the date that the initial partial claim is made. In the case of an individual who was delinquent on the date of the enactment of the Veterans Housing Stability Act of 2025, 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. In response to 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), the Secretary may increase the cap specified in subparagraph (A) to 30 percent of the unpaid principal balance of the guaranteed loan as of the date that the initial partial claim is made. 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. The Secretary may not structure a partial claim under this section as an advance on a loan guaranty provided under this chapter. 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. 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. 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. 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. 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. 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. Once an individual has entered into a partial claim and until that partial claim has been fully repaid, the Secretary shall reduce the aggregate amount of guaranty or insurance housing loan entitlement available to the individual, for any new mortgage loan, under this chapter. 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. 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. Any decision by the Secretary under this section is final and conclusive and is not subject to judicial review. 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. 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. The Secretary shall carry out, on a random-sampling basis, post-payment audits to ensure compliance with all requirements described in paragraph (1). The Secretary may implement the Partial Claim Program through administrative guidance for a period of not more than three years beginning on the date on which the Secretary establishes the program. The Secretary may extend the period described in paragraph (1) based on programmatic or budgetary considerations. The Secretary may establish through administrative guidance described in paragraph (1) additional requirements applicable to partial claims under this section, which shall include the prohibition under subsection (c)(4). 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. Such subchapter is further amended by inserting after section 3723, as added by subsection (a), the following new section: 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— two times the amount of the loss suffered by the Secretary; or another appropriate amount determined by the Secretary, not to exceed $27,894. A civil penalty under this section may be recovered in the same manner as any other debt due the United States. 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. All determinations necessary to carry out this section shall be made by the Secretary. Section 3732 of title 38, United States Code, is amended— in subsection (a)— in paragraph (1), by striking obligation each place it appears and inserting loan; in paragraph (2)— by amending subparagraph (A) to read as follows: The Secretary may, upon such terms and conditions as determined by the Secretary— pay the holder of a loan guaranteed under this chapter an amount necessary to avoid the foreclosure of such loan; 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; or agreement from the holder to remit to the Secretary the portion of indebtedness reimbursed by the borrower to the holder; and 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. in subparagraph (B), by striking obligation each place it appears and inserting housing loan; and by adding at the end the following new subparagraphs: Any decision by the Secretary under this paragraph is final and conclusive and is not subject to judicial review. 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. 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. The Secretary shall carry out, on a random-sampling basis, post-payment audits to ensure compliance with all requirements described in clause (i). in paragraph (5), by striking obligation and inserting loan; in subsection (c)(10)(B)(i), by striking forebearance each place it appears and inserting forbearance; and by adding at the end the following new subsection: The Secretary shall 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. The Secretary of Veterans Affairs shall strongly encourage holders of loans guaranteed under chapter 37 of title 38, United States Code, to implement a moratorium on foreclosures of such loans until the Partial Claim Program established under section 3732 of title 38, United States Code, as added by subsection (a), is fully operational. 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 (a) In general The Secretary shall 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 agreement to repay the portion of indebtedness at loan maturity; and (3) the Secretary receives— (A) a secured interest in the property, subordinate to the first lien guaranteed loan, serving as collateral for the guaranteed loan; or (B) agreement from the holder to remit to the Secretary the portion of indebtedness reimbursed by the borrower to the holder. (c) Administration of partial claim (1) Amount of claim (A) In general Except as provided in subparagraphs (B) and (C), the amount of a partial claim under this section with respect to a loan guaranteed under this chapter may not exceed 25 percent of the unpaid principal balance of the guaranteed loan as of the date that the initial partial claim is made. (B) Certain individuals In the case of an individual who was delinquent on the date of the enactment of the Veterans Housing Stability Act of 2025, 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. (C) Disasters In response to 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), the Secretary may increase the cap specified in subparagraph (A) to 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 Once an individual has entered into a partial claim and until that partial claim has been fully repaid, the Secretary shall reduce the aggregate amount of guaranty or insurance housing loan entitlement available to the individual, for any new mortgage loan, 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) Effect 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) Administrative guidance (1) In general The Secretary may implement the Partial Claim Program through administrative guidance for a period of not more than three years beginning on the date on which the Secretary establishes the program. (2) Extension The Secretary may extend the period described in paragraph (1) based on programmatic or budgetary considerations. (3) Additional requirements The Secretary may establish through administrative guidance described in paragraph (1) additional requirements applicable to partial claims under this section, which shall include the prohibition under subsection (c)(4). (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. . 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. . (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— (I) a secured interest in the property covered by the loan; or (II) agreement from the holder to remit to the Secretary the portion of indebtedness reimbursed by the borrower to the holder; 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. ; (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 (d) The Secretary shall 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. . 3723. Partial Claim Program. 3724. Civil penalties with respect to loan holders. .

3723. Partial Claim Program The Secretary shall 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. 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— the Secretary pays the holder of the guaranteed loan the amount of indebtedness the Secretary determines necessary to help prevent or resolve a default; the borrower of the guaranteed loan enters into a noninterest-bearing agreement to repay the portion of indebtedness at loan maturity; and the Secretary receives— a secured interest in the property, subordinate to the first lien guaranteed loan, serving as collateral for the guaranteed loan; or agreement from the holder to remit to the Secretary the portion of indebtedness reimbursed by the borrower to the holder. Except as provided in subparagraphs (B) and (C), the amount of a partial claim under this section with respect to a loan guaranteed under this chapter may not exceed 25 percent of the unpaid principal balance of the guaranteed loan as of the date that the initial partial claim is made. In the case of an individual who was delinquent on the date of the enactment of the Veterans Housing Stability Act of 2025, 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. In response to 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), the Secretary may increase the cap specified in subparagraph (A) to 30 percent of the unpaid principal balance of the guaranteed loan as of the date that the initial partial claim is made. 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. The Secretary may not structure a partial claim under this section as an advance on a loan guaranty provided under this chapter. 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. 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. 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. 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. 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. 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. Once an individual has entered into a partial claim and until that partial claim has been fully repaid, the Secretary shall reduce the aggregate amount of guaranty or insurance housing loan entitlement available to the individual, for any new mortgage loan, under this chapter. 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. 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. Any decision by the Secretary under this section is final and conclusive and is not subject to judicial review. 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. 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. The Secretary shall carry out, on a random-sampling basis, post-payment audits to ensure compliance with all requirements described in paragraph (1). The Secretary may implement the Partial Claim Program through administrative guidance for a period of not more than three years beginning on the date on which the Secretary establishes the program. The Secretary may extend the period described in paragraph (1) based on programmatic or budgetary considerations. The Secretary may establish through administrative guidance described in paragraph (1) additional requirements applicable to partial claims under this section, which shall include the prohibition under subsection (c)(4). 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.