President Donald Trump signed the VA Home Loan Program Reform Act into law on Wednesday, expanding federal powers to address veteran mortgage defaults.
The legislation grants the Department of Veterans Affairs new authority to intervene when veterans default on government-backed home loans. The move aims to protect both veteran homeowners and taxpayers from mounting foreclosure costs.
H.R. 1815 amends existing veterans’ benefits law, specifically title 38 of the United States Code. The bill authorizes the VA Secretary to take certain actions when borrowers default on VA-guaranteed mortgages.
The bill authorizes the VA to pay the holder of a loan guaranteed by the VA the amount needed to avoid foreclosure of the loan, with the VA securing an interest in the property covered by the loan. Additionally, the VA must prescribe loss mitigation measures to prevent the foreclosure of such a home loan.
The bill also establishes a five-year Partial Claim Program that allows the VA to make a partial claim — that is, purchase a portion of the indebtedness — on VA loans that are in default or at imminent risk of default.
VA home loans help veterans purchase homes with little to no down payments. The program has backed millions of mortgages since World War II.
