MBA Sends Letter on VA Home Loan Program Reform Act

The Mortgage Bankers Association sent a letter to House Veterans Affairs Committee leadership May 6, expressing support for the VA Home Loan Program Reform Act, or H.R. 1815.

The bill includes important amendments in the nature of a substitute that were offered by the majority.

“As the Department of Veterans Affairs moves to phase out the Veterans Affairs Servicing Purchase program by the end of the fiscal year, the need for a permanent partial claim option has become particularly urgent. Without swift legislative action and subsequent VA implementation, thousands of veteran homeowners recovering from temporary financial hardship could face heightened foreclosure risk due to the absence of a sustainable and scalable loss mitigation option,” wrote Bill Killmer, MBA Senior Vice President, Legislative and Political Affairs. “We should not repeat the mistakes of the past when a viable VA loss mitigation option was terminated without a replacement, unfairly stranding veterans without the options available to all other government supported borrowers.”

The bill features a number of improvements that MBA supports–and many of which align with recommendations outlined in testimony provided by the association in March–including:

• Clarifying that the partial claim shall not diminish the guaranty on the existing VA loan.
• Eliminating the proposed charging of interest on the partial claim balance ensuring alignment with FHA and GSE program structures that treat partial claims or loan deferrals as non-interest-bearing junior liens.
• Replacing the fixed sunset date with a rolling five-year period post-enactment which increases predictability for servicers and allows more borrowers to benefit from the program.
• Increasing the maximum claim amount from 25% to 30% of the unpaid principal balance, providing parity with FHA and a broader safety net for distressed borrowers.

The changes represent progress toward creating a partial claim solution that protects veteran borrowers, provides servicer clarity and aligns with existing government-backed programs. MBA also recognized the inclusion of provisions dealing with the conditions for partial claims relief in the event of a natural disaster declaration by the president.

MBA urged the committee members to vote in favor of H.R. 1815.

Click here to read the letter