Veterans Housing Stability Act of 2025
The Veterans Housing Stability Act of 2025 would create a new Partial Claim Program under the VA’s loan guaranty system (the housing loans guaranteed by the Department of Veterans Affairs). When a VA-guaranteed loan is in default or at imminent risk of default, the VA could purchase a portion of the loan’s outstanding indebtedness (a “partial claim”) to help prevent or resolve the default. The borrower would repay that portion at loan maturity with no interest, and the VA would secure collateral or obtain the lender’s agreement to remit the reimbursed portion. The program includes caps on how much can be purchased (generally up to 25% of the unpaid principal balance, 30% for some delinquent borrowers or after a Presidentially declared disaster), and it would temporarily operate via administrative guidance for up to three years. The bill also adds civil penalties for loan holders that knowingly make false statements in connection with the partial claim, and it revises default/foreclosure procedures to accommodate this approach. The overarching aim is to reduce delinquencies and foreclosures for veterans while preserving the VA loan program’s integrity.
Key Points
- 1Partial Claim Program: The VA may buy a portion of the loan’s indebtedness to prevent or resolve default, with the veteran entering a noninterest-bearing repayment agreement for that portion at loan maturity; the VA secures collateral or obtains the lender’s remittance of the reimbursed amount.
- 2Caps and exceptions: The maximum partial claim is generally 25% of the unpaid principal balance, 30% for certain delinquent borrowers at enactment, and up to 30% in major disaster circumstances declared by the President.
- 3Processing and lender role: The loan holder may be required to service the partial claim as an agent of the Secretary, assist in establishing the claim, and be compensated for related duties; the partial claim cannot be structured as an advance on the guaranty.
- 4Default and foreclosure changes: The Secretary can pay to avoid foreclosure and may require actions to secure collateral or obtain remittance; foreclosures follow state/local law, and the decision-making process for partial claims is final and not subject to judicial review.
- 5Civil penalties and compliance: The bill creates a new Section 3724 imposing civil penalties on loan holders who knowingly make false statements related to the partial claim, with penalties tied to losses or set amounts, plus potential recovery of costs and interest; the program includes standards and random post-payment audits for compliance.
- 6Administrative guidance and duration: The Partial Claim Program would be implemented through administrative guidance for up to three years, with possible extension; new loss-mitigation procedures would be established to help prevent foreclosures.