VA Home Loan Program Reform Act

The VA Home Loan Program Reform Act significantly expands the Secretary of Veterans Affairs' authority to prevent foreclosures on guaranteed home loans. It empowers the Secretary to pay loan holders to avert foreclosure, requiring both the holder and veteran to secure the VA's interest in the property. The Act also mandates the Secretary to establish a sequence of loss mitigation procedures that loan holders must offer veterans before the VA can take further action, such as purchasing the entire loan. A key provision is the establishment of a new Partial Claim Program , allowing the Secretary to purchase a portion of a veteran's indebtedness to prevent or resolve default. Under this program, the VA pays the loan holder an amount, typically up to 25% of the unpaid principal balance (or 30% for certain pandemic-affected loans), and receives a subordinate secured interest in the property. Generally, only one partial claim is permitted per loan, though exceptions exist for major disaster declarations. The Act also requires the Secretary to submit a report outlining a strategy to ensure veterans using VA loans are not disadvantaged when seeking representation from real estate agents or brokers. Furthermore, it increases the authorized appropriations for comprehensive service programs for homeless veterans, allocating $344 million for fiscal years 2025 and 2026, and $257.7 million annually through fiscal year 2030.