VA Home Loan Program Reform Act

The VA Home Loan Program Reform Act would expand the Department of Veterans Affairs’ (VA) tools to prevent defaults and foreclosures on VA-guaranteed home loans, create a new Partial Claim Program, streamline loss-mitigation requirements, and boost funding for homeless veteran services. Key changes include authorizing VA to pay loan holders to avoid foreclosure, secure the veteran’s property interest, and place loans in forbearance if needed; establishing a formal loss-mitigation sequence that must be completed before any full loan purchase; creating a new Partial Claim Program where VA purchases a portion of a defaulted loan’s indebtedness (while taking a subordinate lien to protect the first loan); and requiring related reporting, compliance audits, and guidance. The bill also directs VA to report on strategies to protect veterans’ access to real estate representation and increases appropriations for comprehensive services for homeless veterans through 2030. In short, the bill strengthens VA’s ability to intervene early to prevent foreclosures, provides a new mechanism (partial claims) to support borrowers while preserving the first-lien loan structure, and tightens oversight and procedural steps around loss-mitigation activities.