How the rule changed

H.R. 1815 created two bars on what VA could do to a loan. Section 3720(h) said the Secretary may not act under paragraphs (2) through (5) of section 3720(a) "before the completion of the sequence of mitigation options" offered to the veteran. Section 3732(d) said the Secretary may not purchase an entire loan until that sequence is complete.

DOCUMENTED FACT S019

On November 12, 2025, section 7307(a) of Pub. L. 119-37 rewrote the first one. The bar now applies only to actions taken "in conjunction with the purchase of a loan under section 3732(a)(2)" and only "unless the Secretary determines the purchase would be made consistent with section 3732(d)." Section 3732(d) was left intact.

Section 3720(h) as enacted and as amended, with what each change means in plain words

	As enacted, 7/30/2025	As amended, 11/12/2025	What this changes, in plain words
What it bars	Any action under section 3720(a)(2) through (5)	Only actions "in conjunction with the purchase of a loan under section 3732(a)(2)"	It used to cover a range of things VA could do to a loan. Now it covers one of them
The trigger	"before the completion of the sequence of mitigation options offered to the veteran"	Unless "the Secretary determines the purchase would be made consistent with section 3732(d)"	Before, VA had to finish offering you the options first. After, VA decides whether finishing them was necessary
Who decides	The statute. It is a condition	The Secretary. It is a determination	A rule you could point to became a judgement someone makes about your file
Companion bar, section 3732(d)	VA may not purchase an entire loan until the sequence is complete	Unchanged	The second lock is still on the door. Only the first one was loosened

A requirement and a determination are not the same protection. A requirement can be pointed at. A determination has to be requested, reviewed and explained, and none of those steps carries a deadline.

PROJECT ANALYSIS

The amending provision was titled "Clarification of Relationship to Other Powers of Secretary." The provision it amended was titled "Relationship to Other Powers of Secretary."

Families foreclosed between July 30 and November 12, 2025 were under the original bar. Families foreclosed after November 12, 2025 were under the narrowed one. The affected group is two statutory populations, not one, and which one a family is in depends only on the date of their sale.

This sets the enacted text against the amended text. It establishes that the standard changed. It does not establish that any foreclosure resulted from the change.

On April 14, 2025, the Community Home Lenders of America wrote to Secretary Doug Collins. CHLA is the national trade association for small and mid-sized independent mortgage banks. These are the companies that would have had to administer the deadline.

"There are likely thousands (maybe tens of thousands) of veterans who may qualify for VASP who haven't gone through the waterfall, and many who have been told they meet VASP qualifications but have not fully submitted documents to VA (and may not be able to within two weeks)."

CHLA to Secretary Collins, April 14, 2025

The letter asked VA to say in writing what the deadline actually meant, and gave an example.

"if there is key information missing from an existing application (or an issue with title, etc), VA should give the veteran and their servicer time to cure the fault if the application was submitted on time, rather than just deny the file."

CHLA to Secretary Collins, April 14, 2025

It also asked for "a new transition deadline of 60 days post VA's formal document/circular/handbook publication of this program change."

DOCUMENTED FACT S189

This is a trade association's letter, not a government finding, and it does not establish that VA declined any particular application. What it establishes is that the risk was put to the Secretary in writing, by the industry that would have to run the deadline, before the deadline ran.

This section puts three VA housing measures next to each other. They moved between July 2025 and June 2026. All three were announced in the same vocabulary: affordability, cutting red tape, protecting veterans. They did three different things.

They are compared here because a family trying to work out whether Congress has helped them cannot learn that from the announcements. The three below read almost identically and one of them took a protection away. Reading the measure itself is the only way to tell, and most people have no reason to know how.

Three VA housing measures, how each was described when it moved, and what each one did

The measure	How it was described, verbatim	What it did
H.R. 1815, signed July 30, 2025	"provides veterans at-risk of foreclosure with a safety net to get back on track with their mortgage payments"	Created the partial claim and two bars on what VA could do to a loan. Added protection.
Section 7307 of Pub. L. 119-37, November 12, 2025	"Strengthens VA's Partial Claim Program to better protect veteran homeowners"	Narrowed one of those two bars. Removed protection.
H.R. 8532, introduced April 27, 2026, still pending	"Affordability, Cutting Red Tape in VA Home Loan Program"	Not law. Would remove verification steps when a loan is written. No effect either way once a family is behind.

DOCUMENTED FACT S201 S202 S019 S199

The middle column is quotes. Anyone can open the three announcements and read them. The right-hand column is what the measures did, and the three rows are not the same result three times.

The practical use of this table is small and it is real. When the next VA housing measure is announced, the announcement will not tell a family whether it helps them. The text will. Every row on this site carries the document behind it for that reason.

Row two carries one more thing. Section 7307 was titled "Clarification of Relationship to Other Powers of Secretary". The most defensible reading is a clarification with a side effect nobody examined. It travelled inside a package of veteran programs, and the Senate companion was bipartisan. The change to the bar is real, and it is set out at the record of that change.

This bill had an earlier version. H.R. 8647 was introduced in the 118th Congress on June 5, 2024, under the same short title. Its loss mitigation provision read: "The Secretary may prescribe loss mitigation procedures, including a mandatory sequence in which the holder of a loan guaranteed under this chapter shall offer loss mitigation options to veterans, to help prevent the foreclosure of any such loan."

DOCUMENTED FACT S204

The version that became law changed may prescribe to shall prescribe. The rest of the sentence stayed where it was.

DOCUMENTED FACT S151

That is not a tidy-up. The Supreme Court has said what those two words do to a duty written into Title 38, the part of the law that governs veterans' benefits. In Kingdomware Technologies, Inc. v. United States, decided June 16, 2016, the Court was unanimous. Justice Thomas wrote: "Unlike the word 'may,' which implies discretion, the word 'shall' usually connotes a requirement."

DOCUMENTED FACT S203

In plain words. May means the Secretary gets to decide whether to do it at all. Shall means the Secretary has to. Congress read a draft that left the choice with the Department, and took the choice away before it passed the bill.

PROJECT ANALYSIS S203 S204

There is a limit on how far that reaches, and it is worth being exact about. The mandatory duty is the duty to set the procedures and run the program. It is not a promise that any one family gets any one answer on their own file. Those are two different questions, and a document that runs them together is weaker than one that keeps them apart.

Kingdomware itself was about a different corner of Title 38, small-business contracting, not home loans. It is cited here for one thing only: what the words mean when Congress writes them into this title.

PROJECT ANALYSIS

Seventeen months before the law passed, VA's top home loan official told a House subcommittee why the Department would not run a partial claim program. He was not evasive about it. He gave a reason, in writing, and the reason was about authority.

DOCUMENTED FACT S052

John Bell, Executive Director of VA's Loan Guaranty Service, wrote that "it has been VA's longstanding and public position that Congress never authorized a partial advance on the guaranty without termination of the loan."

DOCUMENTED FACT S052

What that means in plain words. A partial claim pays part of what is owed and leaves the loan alive. Other federal housing programs carry 90 percent or more of the loss when a loan defaults. VA carries 25 percent. Paying out of a guarantee that small, VA argued, was not something Congress had given it the power to do, and doing it could damage the securities that fund these loans in the first place.

DOCUMENTED FACT S052

VA built a COVID partial claim anyway, and said openly how. It "attempted to create a program as similar to HUD and USDA's partial claim programs as possible while making it fit within VA's existing authority", by borrowing the authority behind the older loan refund program at 38 U.S.C. 3732(a).

DOCUMENTED FACT S052

The second objection was about the family, not the authority. Speaking at the same hearing, Bell said a partial claim "may leave veterans with large balloon payments at the end of their loan". The money set aside is not forgiven. It waits at zero interest, and it comes due when the family sells or refinances.

DOCUMENTED FACT S056

Congress answered by writing the authority. The VA Home Loan Program Reform Act was signed on July 30, 2025. It created a partial claim program at 38 U.S.C. 3737. Whether VA had the power stopped being a question. VA's own policy putting it into effect took hold on June 1, 2026.

DOCUMENTED FACT S151

This reads as a real disagreement about design, and that is how this page reads it. VA said the guarantee could not be advanced in part without ending the loan. Congress disagreed and wrote the power in. Nothing in the record shows the position being hidden: it was stated to a subcommittee, in writing, and published.

PROJECT ANALYSIS S052 S151

The balloon-payment objection did not go away when the law passed, and it should not be dropped here. It is the strongest argument against a partial claim, and it belongs next to the authority question rather than in place of it.

PROJECT ANALYSIS

The two passages in full, and how this text was read

On authority, written statement, February 15, 2024. "Although VA does have broad powers to waive, pay, or compensate claims or demands (38 U.S.C. § 3720(a)(3)(4)), it has been VA's longstanding and public position that Congress never authorized a partial advance on the guaranty without termination of the loan. The lack of authority may be because VA only carries 25 percent of the risk of a default through its guaranty, where the other Federal programs carry 90 percent or more of default risk. Furthermore, subtracting from the guaranty can adversely affect the mortgage-backed securities that often serve as the liquidity for lenders that participate in VA's program."

On balloon payments, spoken testimony, same day. "Where the partial claim program provides short-term relief, it may leave veterans with large balloon payments at the end of their loan. Rather than mortgaging their futures for a short term gain, VASP provides veterans long-term financial security and does not burden them with a balloon payment."

How the transcript was read. The committee's published transcript PDF is a scan with no text layer, so an ordinary text search of it returns nothing at all. The 81 pages were converted to images at 300 dots per inch and read by optical character recognition on August 24, 2026. The passage on authority above was then checked by eye against the page image, word for word. Two oddities in the printed transcript are the transcript's own and not reading errors: it prints "governing statues" for statutes, and prints the regulation as 38 CFR 4320.

DOCUMENTED FACT S052 S056

Nine days after the national emergency was declared, Washington's own financial regulator wrote to the mortgage companies operating in the state. The Department of Financial Institutions asked them to pause payments for ninety days, waive late fees and online payment fees, stop reporting late payments to the credit agencies, allow an extra ninety days to finish trial modifications, and postpone foreclosures.

DOCUMENTED FACT S216

Two things about that letter matter more than the list in it.

The first is what kind of rule it was. The Washington Attorney General's own page describes this guidance as "non-binding recommendations for mortgage servicers." The state regulator asked. It did not require. A mortgage company that ignored it was not breaking a Washington rule.

DOCUMENTED FACT S216

The second is what the letter does not contain. It creates a ninety-day pause and says nothing about how the paused payments get repaid afterwards. There is no repayment plan in it, no deferral, no instruction on what happens on day ninety-one.

DOCUMENTED FACT S216

That is the same shape as the failure this record documents at the federal level, arriving earlier and from a different direction. The pause was built. The way out was not. Families were told to stop paying, by a state that could only ask, under a document that never said how they would start again.

PROJECT ANALYSIS S216

Where this sits in the three levels of rule set out below: it is the weakest of them. Not a statute, not a regulation, but guidance a regulator hoped would be followed. The difference between those levels is on this page, and it is the difference between a duty and a request.

PROJECT ANALYSIS

When a mortgage company or an agency says a duty was "only guidance", that is a claim about which level a rule sits on. There are three levels. Two of them are binding law and one of them is not, and knowing which is which decides whether a company was free to skip a step.

The three levels a rule can sit on, with examples from these cases and whether each one binds

Level	What it is	Examples in these cases	Does it bind?
1	Statute. A law passed by Congress	38 U.S.C. 3703, 3720 and 3732; 12 U.S.C. 2605, which is RESPA	Yes. Only Congress can change it
2	Regulation. Published in the Code of Federal Regulations after public notice and comment	12 CFR 1024.41, which is Regulation X; 38 CFR 36.4315, 36.4319 and 36.4350	Yes. It has the force of law
3	Agency guidance. Handbooks, circulars, program letters	The M26-4 servicer handbook; VA circulars	Not law on its own. VA conditions money and program standing on it

DOCUMENTED FACT S021 S022 S105 S106 S107

This matters for one concrete reason. A hierarchy for reviewing loss mitigation options did not arrive with the 2026 handbook. It has been sitting in a regulation, at level two. 38 CFR 36.4319 says the options "are listed in paragraph (b) of this section from top to bottom in their preferred order of consideration (i.e., a hierarchy for review)".

DOCUMENTED FACT S106

The same regulation pays for it. VA pays a servicer for each completed loss mitigation outcome, on a sliding scale: $700 down to $300 for a loan modification, $1,000 down to $600 for a short sale, $350 down to $150 for a deed in lieu, and $200 down to $120 for a repayment plan or a special forbearance. A company that follows the order gets paid. A company at the bottom tier gets nothing.

DOCUMENTED FACT S106

So a company that considered no options in any order was not departing from a suggestion. And Regulation X, at 12 CFR 1024.41, is also level two and applied to these loans the whole time, independently of anything VA wrote.

PROJECT ANALYSIS S022 S106

One caution about level three, because it cuts the other way. The M26-4 handbook has been revised many times, and the version published now is not the version in force during 2022 to 2025. Anyone citing handbook language against conduct from those years has to cite the version that was in effect then, not the one on the shelf today.

The level a rule sits on is also what decides how it gets fixed. A level three problem can be fixed by the agency in an afternoon. A level two problem takes notice and comment. A level one problem takes Congress. The seven criteria that appear only in the handbook are a level three problem, which is why removing them needs no new law.

PROJECT ANALYSIS

H.R. 8532, the VA Home Loan Affordability Act, was introduced on April 27, 2026. It is about cost and paperwork. Its long title says so: to align the VA housing loan program with the requirements of the Federal Housing Administration. Eight provisions, one section.

DOCUMENTED FACT S199

H.R. 8532 has not passed the House or the Senate. It is a bill, and what follows is what it would do if it became law. The clearest gain for a veteran is subsection (d). It would cap what a buyer pays in closing costs and cap what a seller can be charged in fees. That is less cash needed on the day you buy, which is the day most families are shortest of it. It is a real benefit and it should pass.

Several of the other provisions would take steps out of the process. A lender would no longer have to produce third-party paperwork to back up its fees. A refinance could be done without an appraisal. The bar for an adjustable-rate refinance would drop. Fewer steps means a faster and cheaper closing for the buyer, and it also means fewer checks on the company writing the loan. Both of those are true at the same time, and a family deciding whether this helps them should be told both.

PROJECT ANALYSIS S199

The eight provisions of H.R. 8532, headings as printed in the bill, and which part of the loan each one governs

	Heading as printed in the bill	What part of the loan it governs
(a)	Prohibition of Requirement of Third Party Verification of Lender Fees	Getting the loan
(b)	Refinancing of Housing Loans	Refinancing
(c)	Expansion of Guaranteed Loans for Condominiums	Getting the loan
(d)	Maximum Closing Costs and Seller Fees for Guaranteed Loans	Getting the loan, and protective
(e)	Regular Prescription of Debt-to-Income Ratios	Qualifying for the loan
(f)	Minimum Experience of an Appraiser Required	Getting the loan
(g)	Review of Appraisal Minimum Property Requirements	Getting the loan
(h)	Plan To Modernize IT for Housing Loans	VA's own systems

Read the third column down. Every provision is about how a veteran gets into a loan. None of them is about what happens after, and after is where this case lives: foreclosure, loss mitigation, whether a mortgage company followed the rules, VASP, and the partial claim Congress created in H.R. 1815.

PROJECT ANALYSIS S199

A bill named for affordability is not obliged to solve foreclosure, and that is not the test. The test is whether a VA housing bill can carry duties for the companies that service these loans. It can, because another one does. H.R. 9379, on this Committee's docket the same year, is also a housing bill, and it carries a deadline, a limit on what a company may tell a veteran, and an Inspector General audit of whether companies complied. The subject matter was never the obstacle.

PROJECT ANALYSIS S199 S200

So this is not an argument against the bill. Cap the closing costs and pass it. The point is narrower. All eight provisions are about getting a veteran through the front door of a house. Not one is about the back door, which is the one families are being put out of. A bill about buying a home is allowed to say something about keeping one.

An assumption is a buyer taking over a seller's existing VA loan. It is not a partial claim, not VASP, and not loss mitigation. H.R. 9379 has not passed either. It was introduced on June 18, 2026 and it is still a bill. It would do three things to that one process, and they are worth knowing because they are the three things families in default keep asking for.

It would set a clock. The mortgage company "shall process and render a decision on a complete application for the assumption of such a loan within 45 calendar days of receipt." A deadline you can hold someone to.

It would limit what you can be told. Companies "may not threaten, suggest, or imply to individuals who are potential assumers of such loans that the processing timeline will exceed 45 calendar days as a reason to discourage assumptions." Being talked out of applying is treated as a harm in itself.

It would order an audit. The Inspector General, "in consultation with the Comptroller General of the United States, shall conduct an assessment" within 90 days, reporting to Congress within 18 months. Somebody measures whether the deadline was actually met, company by company, and tells Congress the answer.

DOCUMENTED FACT S200

Now set that beside the protection that covers families in default. The bar in section 3720(h) started as a condition and became a determination the Secretary makes, and as the record of that change sets out, none of the steps in a determination carries a deadline. There is no clock, no limit on what you can be told while you wait, and no audit of who waited longest.

PROJECT ANALYSIS

The ask is narrow. It needs no new authorizing language and no new appropriation. The provisions are drafted and they are already before this Committee. Take the three written for assumptions, the 45-day deadline, the limit on discouraging an applicant, and the company-by-company audit, and apply them to loss mitigation and partial claim applications. The only open question is what they are pointed at. None of it is law yet.