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With the impending end of a veteran-focused foreclosure assistance program’s acceptance of new applications on May 1, the Mortgage Bankers Association (MBA) continues to sound the alarm over proceeding without something to replace it.
On Wednesday, the House of Representatives Committee on Veterans’ Affairs Subcommittee on Economic Opportunity has scheduled a markup of several veteran-focused pieces of proposed legislation, which includes a bill called the “VA Home Loan Program Reform Act.” sponsored by subcommittee chairman Rep. Derrick Van Orden (R-Wis.).
“MBA remains deeply concerned that the VA’s plans to end the VASP program without a viable replacement – a permanent partial claim – will result in more veterans at risk of losing their homes,” MBA told HousingWire. “We believe the partial claim authority outlined in the text of both the majority and minority versions of an amendment in the nature of a substitute (ANS) offer a practical and permanent solution that aligns with existing programs across other federal housing agencies.”
The MBA submitted a letter to the chairs and ranking members of the broader VA committee and the subcommittee, urging lawmakers to describe the need for a permanent partial claim option in light of the end of the Veteran Affairs Servicing Purchase (VASP) program. VASP will stop accepting new applications at the beginning of May, and committee leadership have lauded the development.
VA committee chair Rep. Mike Bost (R-Ill.) and Van Orden have said that VASP “was created for political purposes by the Biden-Harris administration to undercut the [Department of Veterans Affairs (VA)] Home Loan program.”
But MBA came to its defense when the application end date was announced, and is now seeking to inform lawmakers about the need for a replacement.
“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,” said Bill Killmer, SVP of legislative and political affairs at MBA, in the letter submitted ahead of Wednesday’s markup.
But partial claim authority included in proposed majority and minority versions of new bill text, in the form of the ANS before the subcommittee, “would ensure veterans are not left behind during moments of financial stress,” Killmer said.
The “VA Home Loan Program Reform Act,” otherwise known as House Resolution (HR) 1815, would “authorize the Secretary of Veterans Affairs to take certain actions in the case of a default on a home loan guaranteed by the secretary,” according to the text of the bill.
The most recent version of the bill, Killmer said, includes amendments that MBA supports including the elimination of interest on the partial claim balance, and replacing a fixed end date with a rolling three-year period.
MBA hopes, however, that the majority’s version can make more changes, including clarification that “that the partial claim shall not diminish the guaranty on the existing VA loan;” increasing the maximum claim amount from 20% to 30% of the unpaid principal balance (UPB) to align it with programs offered by the Federal Housing Administration (FHA); and to require implementation through the formal rulemaking process.
Similarly, MBA has expressed support for a Democratic version of the bill that includes a partial claim program establishment and creating servicer participation and operation standards.
MBA does not, however, support “granting VA new statutory forbearance and foreclosure moratorium authority,” urging the committee to remove or modify the provision due to concerns of operational confusion, a need for “a consistent federal response,” and a belief that existing administrative authority by the VA is “sufficient.”
“MBA strongly supports the overarching goal of H.R. 1815 to enhance the VA’s loss mitigation tool kit, and urges Members to vote ‘Aye’ to advance H.R. 1815 to consideration by the full committee,” Killmer said. “The creation of a permanent partial claim program is a significant and overdue improvement that will benefit both veterans and the broader mortgage market.”
