H.R. "1004, the “Love Lives on Act of 2025”; H.R. 2164, the “Dayton National Cemetery Expansion Act of 2025”; H.R. 5339, the “Susan E. Lukas 9/11 Servicemember Fairness Act”; H.R. 5723, the “FRAUD in VA Disability Exam Act”; H.R. 6698, the “Board of Veterans Appeals Annual Report Transparency Act of 2025”; H.R. 6943, the “Veterans Burial Allowance and Reimbursement Act of 2026”; H.R. 7260, the “National Cemetery Administration Annual Report Act of 2026”
Markup•House Veterans' Affairs Subcommittee on Disability Assistance and Memorial Affairs•Mar 26, 2026 · 1:15 PM
Summary
House Veterans' Affairs Subcommittee on Disability Assistance and Memorial Affairs held a markup on Mar 26, 2026 at 1:15 PM in Cannon House Office Building, Room 360.
Record
The meeting has its video, its transcript and documents on the record.
Video
The proceedings, as the committee streamed them.
Transcript
The transcript runs to 2,513 lines and 140,603 characters, as the Government Publishing Office printed it.
1[House Hearing, 119 Congress]2[From the U.S. Government Publishing Office]34 KITCHEN TABLE ISSUES: LOWERING COSTS5 FOR VETERAN FAMILIES THROUGH THE6 VA HOME LOAN PROGRAM78=======================================================================910 HEARING1112 before the1314 SUBCOMMITTEE ON ECONOMIC OPPORTUNITY1516 of the1718 COMMITTEE ON VETERANS' AFFAIRS1920 U.S. HOUSE OF REPRESENTATIVES2122 ONE HUNDRED NINETEENTH CONGRESS2324 SECOND SESSION2526 __________2728 THURSDAY, MARCH 26, 20262930 __________3132 Serial No. 119-533334 __________3536 Printed for the use of the Committee on Veterans' Affairs3738 [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]3940 Available via http://govinfo.gov41 ______4243 U.S. GOVERNMENT PUBLISHING OFFICE444563-816 WASHINGTON : 20264647 COMMITTEE ON VETERANS' AFFAIRS4849 MIKE BOST, Illinois, Chairman5051AUMUA AMATA COLEMAN RADEWAGEN, MARK TAKANO, California, Ranking52 American Samoa, Vice-Chairwoman Member53JACK BERGMAN, Michigan JULIA BROWNLEY, California54NANCY MACE, South Carolina CHRIS PAPPAS, New Hampshire55MARIANNETTE MILLER-MEEKS, Iowa SHEILA CHERFILUS-MCCORMICK,56GREGORY F. MURPHY, North Carolina Florida57DERRICK VAN ORDEN, Wisconsin MORGAN MCGARVEY, Kentucky58MORGAN LUTTRELL, Texas DELIA RAMIREZ, Illinois59JUAN CISCOMANI, Arizona NIKKI BUDZINSKI, Illinois60KEITH SELF, Texas TIMOTHY M. KENNEDY, New York61JEN KIGGANS, Virginia MAXINE DEXTER, Oregon62ABE HAMADEH, Arizona HERB CONAWAY, New Jersey63KIMBERLYN KING-HINDS, Northern KELLY MORRISON, Minnesota64 Mariana Islands65TOM BARRETT, Michigan6667 Jon Clark, Staff Director68 Matt Reel, Democratic Staff Director6970 SUBCOMMITTEE ON ECONOMIC OPPORTUNITY7172 DERRICK VAN ORDEN, Wisconsin, Chairman7374JUAN CISCOMANI, Arizona CHRIS PAPPAS, New Hampshire,75ABE HAMADEH, Arizona Ranking Member76KIMBERLYN KING-HINDS, Northern MORGAN MCGARVEY, Kentucky77 Mariana Islands DELIA RAMIREZ, Illinois78TOM BARRETT, Michigan TIMOTHY M. KENNEDY, New York7980Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public81hearing records of the Committee on Veterans' Affairs are also82published in electronic form. The printed hearing record remains the83official version. Because electronic submissions are used to prepare84both printed and electronic versions of the hearing record, the process85of converting between various electronic formats may introduce86unintentional errors or omissions. Such occurrences are inherent in the87current publication process and should diminish as the process is88further refined.8990 C O N T E N T S9192 ----------9394 THURSDAY, MARCH 26, 20269596 Page9798 OPENING STATEMENTS99100The Honorable Derrick Van Orden, Chairman........................ 1101The Honorable Chris Pappas, Ranking Member....................... 2102103 WITNESSES104105 Panel I106107Mr. Patrick Zondervan, Executive Director, Loan Guaranty Service,108 Veterans Benefits Administration, U.S. Department of Veterans109 Affairs........................................................ 4110111 Accompanied by:112113 Mr. Terry Rouch, Assistant Director for Loan Policy and114 Valuation, Loan Guaranty Service, Veterans Benefits115 Administration, U.S. Department of Veterans Affairs116117 Panel II118119Mr. Owen Lee, Co-Owner & Chief Executive Officer, Success120 Mortgage Partners, 2026 MBA Chair Elect, Mortgage Bankers121 Association.................................................... 12122123Mr. Kurt Thompson, Owner & Broker, RE/MAX, Executive Committee124 Member, National Association of Realtors....................... 13125126Ms. Alys Cohen, Director of Federal Housing Advocacy, National127 Consumer Law Center............................................ 15128129 APPENDIX130131 Prepared Statements Of Witnesses132133Mr. Patrick Zondervan Prepared Statement......................... 25134Mr. Owen Lee Prepared Statement.................................. 27135Mr. Kurt Thompson Prepared Statement............................. 31136Ms. Alys Cohen Prepared Statement................................ 34137138 Statements For The Record139140Auction.com Prepared Statement................................... 39141National Association of Mortgage Brokers Prepared Statement...... 43142143 KITCHEN TABLE ISSUES: LOWERING COSTS144 FOR VETERAN FAMILIES THROUGH THE145 VA HOME LOAN PROGRAM146147 ----------148149 THURSDAY, MARCH 26, 2026150151 Subcommittee on Economic Opportunity,152 Committee on Veterans' Affairs,153 U.S. House of Representatives,154 Washington, DC.155 The subcommittee met, pursuant to notice, at 3:37 p.m., in156room 360, Cannon House Office Building, Hon. Derrick Van Orden,157[chairman of the subcommittee] presiding.158 Present: Representatives Van Orden, Hamadeh, King-Hinds,159Pappas, and Kennedy.160161 OPENING STATEMENT OF DERRICK VAN ORDEN, CHAIRMAN162163 Mr. Van Orden. The subcommittee will come to order. I will164figure out how to use these buttons later.165 I want to thank everyone for being here today to discuss166affordability for our men and women who have served in ways we167can improve and modernize the U.S. Department of Veterans168Affairs (VA) Home Loan Program. The purpose of this VA benefit169is to assist veterans and servicemembers with living the170American Dream by purchasing their first home. As always, I171appreciate the nonpartisan approach to the subcommittee, my172friendship with Mr. Pappas, Ranking Member Pappas. It is a173something I really truly enjoy that we have a great working174relationship.175 In Fiscal Year 2025, an estimated 528,340 veterans,176servicemembers, and their families used the VA Home Loan177Program, with 61 percent of VA guaranteed loans being used for178the initial purchase. VA has guaranteed over 29 million loans179in excess of $4 trillion since the 1940's. I will tell you180what, the VA Home Loan Guarantee Program and the GI Bill are181the two best programs the U.S. Government has ever developed.182These impressive numbers represent millions of veterans, their183servicemembers, and families who may not have otherwise184achieved the American dream of home ownership.185 I am also proud user of the VA Home Loan Program myself,186and I personally know the benefits and purpose of this program187can bring to veterans and their families. This is a benefit188that we must protect to ensure it unleashes economic189opportunity for today and tomorrow's veterans.190 Last year I championed H.R. 1815, VA Home Loan Program191Reform Act, that was signed into law by President Trump. I am192looking forward to full implementation of this partial claims193program that will put the VA Home Loan Program on par with194other Federal home loans in terms of options to mitigate195foreclosure. That is something that I know the timing of that I196think it should have--probably should have been earlier. We197talked about this with the Veterans Affairs Servicing Purchase198(VASP) deal. This law helps fulfill a promise to those who199protect us with their services and continue--with their200service, excuse me, and can continue to do so today by201providing a safety net to maintain home ownership. I am very202proud of our legislation and grateful to President Trump for203signing it into law.204 I know the VA is working with industry to implement this205law and encourage them to work closely with industry so that206the good work we have done with this law is not wasted in207bureaucratic red tape. The enactment and implementation of this208law is important, but the work is not done. I am currently209working on a piece of legislation that would streamline the VA210Home Loan Program by requiring VA to review and update their211outdated Minimum Property Requirements (MPR) and barriers to212entry into the appraisal process.213 We must find ways to eliminate the unnecessary214administrative costs of the VA home loan and better align it215with other Federal housing programs so that it remains the best216benefit our veterans in today's volatile housing market. It is217both a priority of mine, Chairman Bost, our Republican218conference, and President Trump to ensure that housing is219affordable for all, especially our veterans. Today we will be220hearing from industry experts about how to do just that.221 I was happy to see the VA is taking a closer look at222updating some of their minimum property requirements, but there223is more work that needs to be done to streamline the home loan224program and remove unnecessary bureaucracy getting in the way225of veteran home ownership. I want today's discussion to be226meaningful, respectful obviously, and with the end state of227keeping housing affordable for our veterans, servicemembers,228and their families.229 With that, I would like to yield to my very good friend,230Ranking Member Pappas.231232 OPENING STATEMENT OF CHRIS PAPPAS, RANKING MEMBER233234 Mr. Pappas. Thank you, Mr. Chairman, for holding this235session. I agree with you that the VA Home Loan Guarantee236Program is one of the most important commitments that we can237make to veterans. So essential, especially at this moment where238we are dealing with a housing crunch all across our country.239 We know that housing prices, along with pretty much every240other expense a family faces, like energy and groceries,241continue to rise. As veterans spend more money at the pump and242at the grocery store, they have less to spend on rent, their243mortgage, or to save for a down payment. From what I hear244constantly from my constituents, and I am sure this applies to245all of my colleagues, too, affordability concerns are not a246hoax. They are a huge concern of Americans. I am thankful that247we are holding this hearing in recognition of that.248 When we are talking about how to make a VA Home Loan249Program more affordable, we cannot forget that veterans are250facing the same housing and affordability crisis that impacts251all Americans, a situation we cannot address through minor252fixes to the home loan program itself. For example, when most253Americans talk about barriers to buying a home, they are254talking about the down payment. We know for veterans, one of255the greatest advantages of the Home Loan Guarantee Program is256that no money that no money down option, so down payments are257not an issue for a lot of veterans.258 When it comes to closing fees, VA already limits what259lenders can charge veterans. Of course, we should be open to a260discussion about how limiting fees even more can save in terms261of veterans costs. However, it is important to make clear that262up to two-thirds of the closing fees a veteran pays are to263register the deed, homeowners insurance, escrow, and taxes,264none of which this committee can influence.265 My point here is that focusing on issues like fees should266not divert our attention away from the crux of the problem.267That is why we need a whole of government approach to tackle268the housing crisis, lower cost for veterans and all Americans,269and put home ownership back within reach for everyone. We270should explore comprehensive policies that would provide real271savings, tangible affordability, and accessibility to home272loans for veterans.273 We need to focus on legislative packages, like the updated274Senate-passed 21st Century Road to Housing Act, which House275leadership has yet to put to the floor for a vote. This276bipartisan bill includes bills I helped introduce that would277cut red tape to build more housing, strengthen assistance to278middle class homeowners for improvements and repairs, and279expand access to the VA Home Loan Program by ensuring veterans280are made aware of the benefit during the loan application281stage. The housing crisis requires an all hands on deck282approach and we should be using every tool at our disposal to283create the conditions to tear down red tape, build more284housing, and lower prices.285 In my State of New Hampshire, we are moving in that286direction. We have a First in the Nation Veterans Campus in287Franklin, which is a partnership between the private sector,288government, and the nonprofit community, funded with Federal289dollars and providing critical housing for our veterans. We are290empowering our nonprofit and Veterans Service Organizations291(VSO) partners, including Harbor Care, that have stepped up to292fill a need for emergency, transitional, and permanent housing293for veterans.294 Based on the testimony we received and we will hear295momentarily, perhaps there are ways to align VA along with296other Federal agencies to put veterans on an equal footing with297nonveteran home buyers. However, the benefits must outweigh the298cost, especially if proposals will ultimately expose veterans299to excessive risks. Rather than discussing slight changes to300improve accessibility, let us also focus on what this hearing301should be about: affordability and that big picture302conversation about how to bring down costs and make life better303for veterans and all Americans.304 I look forward to the testimony today and I yield back.305 Mr. Van Orden. The gentleman yields.306 Before I introduce the witness panel, I would like to307recognize one of my constituents who is sitting in the308audience. Jane, how are you? Thanks for coming very much. She309works for Portage County and she does a fantastic job. Thank310you so much for joining us today.311 I will now introduce the witness panel. Our first witness312is Mr. Patrick Zondervan, executive director of Loan Guaranty313Service at the Department of Veterans Affairs. Accompanying Mr.314Zondervan is Mr. Terry Rouch, assistant director for Loan315Policy and Valuation, Loan Guaranty Service at the Department316of Veterans Affairs.317 I ask you two gentlemen to stand and raise your right hand.318 [Witnesses sworn.]319 Mr. Van Orden. You may be seated. Let the record reflect320that the witnesses have answered in the affirmative.321 Mr. Zondervan, you are now recognized for 5 minutes to322deliver your testimony on behalf of the Department of Veterans323Affairs.324325 STATEMENT OF PATRICK ZONDERVAN326327 Mr. Zondervan. Good afternoon, Chairman Van Orden, Ranking328Member Pappas, and members of the subcommittee. Thank you for329the opportunity to present information on several topics330regarding the Department of Veterans Affairs' Home Loan331Guarantee Program.332 Mr. Van Orden. Mr. Zondervan, is your microphone on?333 Mr. Zondervan. Yes. I will try to speak a little louder.334How is that? Okay. Good afternoon, Chairman Van Orden, Ranking335Member Pappas, and other members of the subcommittee. Thank you336for the opportunity to present information on several topics337regarding the Department of Veterans Affairs' Home Loan338Guaranty Program. Joining me is Terry Rouch, assistant director339for the VA Loan Policy and Valuation. My remarks will focus on340a set of key issues that are both timely and significant to341veteran home lending. These are also detailed in my written342testimony for your reference.343 As the new executive director of VA Loan Guaranty Service,344I have the distinct honor to lead the VA's Home Loan Program.345The VA Home Loan Program is an earned benefit for veterans and346servicemembers to obtain, retain, and adapt a home which truly347recognizes their service to the Nation. As a veteran myself, I348have personally leveraged the VA Home Loan Program more than349once to secure stable housing for my family.350 Since 1944, VA has been helping veterans achieve the351American Dream of home ownership. To date, VA has guaranteed352more than 29 million home loans totaling over $4 trillion and353there are more than 3.9 million active VA guaranteed loans. VA354guaranteed home loans can be considered as one of the most355useful VA benefits available to veterans and servicemembers and356is a premier choice in opening the door to home ownership.357 VA home loans provide a great opportunity for the first-358time veteran home buyers to purchase a home because of the359following unique features on the VA Home Loan Program. One360hundred percent financing with no down payment required.361Exemptions from paying the VA funding fee for service-connected362disabled veterans in receipt of disability compensation. Limits363on certain costs lenders may charge a veteran for origination364and administrative fees to 1 percent. Lower interest rates. No365monthly private insurance premiums. Allowing seller concessions366of up to 4 percent of the reasonable value of the home for367items like prepaid escrow and paying off consumer debts. These368cost-saving measures ensure that the VA home loan is an369affordable option for veterans.370 Even in tight housing markets VA continues to see strong371demand for the program. In Fiscal Year 2025, VA guaranteed more372than 500,000 home loans, with more than 60 percent of those373being new and first-time homeowner purchases.374 While the demand for the VA Home Loan Program is strong,375housing affordability remains a valid concern for veterans as376it does for buyers in the conventional market. With mortgage377rates around 6 percent on average, housing prices remain378elevated in many areas where property taxes, homeowners'379association fees, home insurance costs, and other unexpected380repairs continue to impact the overall cost of home ownership.381 VA continues to make efforts to modernize its origination382system and increase automation to allow lenders to submit383proposed loan information prior to closing and identify384potential errors that may lead to costly corrective measures385after the loan is closed.386 Earlier this month, VA launched an enhancement to the VA387mobile app that now allows eligible veterans to view their388certificates of eligibility from their mobile phones. Within389the first week, more than 35,000 certificates of eligibility390were downloaded from the mobile app.391 An often misunderstood component of the VA program is the392VA appraisal process, which is designed to ensure the home393meets safety, soundness, and livability standards for veterans.394These minimum property requirements have frustrated many395buyers, sellers, and real estate agents alike. Today, I would396like to set the record straight and dispel a few myths about397the VA appraisals for the committee.398 The first myth is that the VA appraisals take too long. As399of February 2026, VA appraisals are taking on average 7400business days to complete, which is equal to other conventional401and Federal Government programs.402 The second myth is that the VA appraisals are a home403inspection. VA appraisals are not a home inspection. The VA404home loan appraisal is an opinion of fair market value. VA is405developing several actions to reduce and simplify the minimum406property requirements for appraisals outlined in VA Regulation,407Handbook policies, and procedures. This month, VA updated the408VA Lenders Handbook chapter 12 with the removal of several409minimum property requirements to streamline the appraisal410process.411 In conclusion, VA will continue to support the path to home412ownership through the VA Home Loan Program, strive to modernize413our systems, streamline processes, and expand communication and414education efforts to improve the VA Home Loan Program for415future veterans and their families.416 Mr. Chairman, thank you for the continued support of the VA417Home Loan Program and for this opportunity to speak today. This418concludes my testimony and I welcome any questions that you or419other members of the subcommittee may have.420421 [The Prepared Statement Of Patrick Zondervan Appears In The422Appendix]423424 Mr. Van Orden. Thank you, Mr. Zondervan. The written425statement of Mr. Zondervan will be entered into the hearing426record.427 We are now going to proceed to questioning. Please stick to428the 5-minute rule.429 I now recognize Ranking Member Pappas for 5 minutes to430question the witnesses.431 Mr. Pappas. Well, thank you very much for that testimony. I432appreciate the steps that you are already taking to make things433more efficient and to streamline processes. I think that is434incredibly important and we always need to be thinking about435how we can do things a little bit better.436 We hear a lot of comments from industry that the processes437and standards for the VA Home Loan Program are different from438other government lending programs, especially when it comes to439the appraisal process and minimum property requirements. I440understand the desire for these programs to be matched up441across the board as it would be easier for industry and it442would reduce misconnections among sellers and real estate443agents that VA-backed loans are harder to complete or take long444longer to get done, as you have addressed. I have to question445the logic, though, that we should lower VA standards to meet446everyone else instead of perhaps raising all standards for447Federal Housing Loan (FHA) and U.S. Department of Agriculture448(USDA) to match VA.449 I am wondering, does the VA Home Loan Program perform450better than similar programs at other agencies? Is that451partially credited to the kinds of protections that are in452place for veterans that are purchasing a home?453 Mr. Zondervan. Thank you for that question, sir. The454protections are very important because the veteran is our first455priority. However, there are parts of our minimum property456requirements that we can remove. Right now what we are doing is457evaluating our policies and identifying any, you know, minimum458property requirements that we can remove without compromising459the additional features that we have to ensure that the safety,460the soundness, and the sanitary conditions of the home remain461in place.462 Mr. Pappas. Could you give folks some examples of ways that463you feel like you could modify the property requirements in a464way that would not hurt veterans or put them at risk?465 Mr. Zondervan. Certainly. Actually, I am going to defer to466my colleague, Mr. Terry.467 Mr. Rouch. Thank you for that question. A lot of these are468cosmetic in nature, so we are looking at some of the things469that have been problematic over the years, such as chipped470paint or peeling paint. Those are one of the ones that are out471there. Hand railings, burglar bars, those type of things have472been problematic, that while there are MPRs and other programs473as well, VA has made those subject to in the past, and so those474are the ones that we want to tackle.475 Mr. Pappas. You agree that there are certain minimum476property requirements that you feel should stay in place as a477means to protect veterans?478 Mr. Rouch. The whole purpose of minimum property479requirements are safety, soundness, and sanitation. Those were480the ones that we will be wanting to keep.481 Mr. Pappas. I appreciate that. Last year, the482administration put an end to the VASP program, which we know483offered veterans a low interest rate and refinances to avoid484foreclosure. I am just wondering if you can say whether VASP485prevented folks from getting foreclosed on and if that lowered486the foreclosure rate for veterans.487 Mr. Zondervan. Thank you for that question. The VASP488program did end. The Secretary decided to end it in May of last489year. Our focus right now remains on implementing the partial490claims program, which will now provide the additional option491for veterans to----492 Mr. Pappas. Yes. While it was in place, can you speak to, I493mean, the fact that there were thousands of veterans that were494assisted. I assume for those veterans that that helped them495prevent foreclosure and that kept the foreclosure rate lower496across the board. Would you agree with that?497 Mr. Zondervan. I would say that the VASP program at the498time did have options to help veterans who were facing499foreclosure, yes.500 Mr. Pappas. Okay. Well, it is certainly borne out in the501numbers that I have seen. Talking about partial claims, I mean,502we are approaching a year since this was, you know, designed503and passed by Congress. We are really eager to see this504implemented. With VASP gone, I am wondering what happens to505veterans who are still waiting for this to be stood up.506 Mr. Zondervan. Thank you for that question. There are other507options before the partial claims rolls out. There are508forbearance, special forbearance, modifications of the loans.509Those options have always been available absent of the VASP510program. We work closely with our servicers and the industry511partners to ensure that when veterans reach a point of default,512that they are offered all of the remaining options that are513available until the partial claims program comes out.514 Mr. Pappas. We are seeing the foreclosure rate increase,515and so I think time is of the essence here. I know you have516been briefing staff. I am wondering if you can give us a517clearer picture on the timetable for the rollout.518 Mr. Zondervan. Absolutely. Thank you for that question. Our519goal is to have it available to the public in June of this520year.521 Mr. Pappas. Okay. You have been through the comment period.522I assume you have received significant comments from folks on523the outside that would be, you know, working with veterans on524loans. Can you characterize any of those comments and how long525it is going to take to work through that, you will still be526able to hit that June timeframe?527 Mr. Zondervan. Certainly. Thank you. We actually did528something new with the VA. We used what is called a drafting529table. It is different from comments through the regulatory530process. We received well over 800 individual unique feedback531items.532 Mr. Van Orden. The gentleman's time has expired.533 Mr. Pappas. I yield back.534 Mr. Van Orden. The gentleman yields back.535 The chair recognizes Representative Hamadeh from Arizona.536 Mr. Hamadeh. Thank you, Mr. Chairman. Mr. Zondervan, thank537you for being here.538 As a veteran, myself and I represent Arizona's Eighth539District, which is home to one of the fastest-growing veteran540populations in the country, the median home prices in our541communities are now topping $450,000. Young veterans fresh off542Active Duty, they are trying to start families and put down543roots in the State they defended, are being locked out, not544because they lack discipline or drive, but because the VA Home545Loan Program has failed to keep up with Arizona's skyrocketing546cost of living and housing market.547 My first question is, Mr. Zondervan, my constituents in548Arizona are getting slammed with what I call fee stacking. You549know, lenders are charging the full 1 percent origination fee550on VA loans, then piling on extra itemized charges for551processing, underwriting, and others. That 1 percent is552supposed to be all-in inclusive. It is meant to cover the553lender's labor and overhead. Now, these sneaky add-on554administrative fees are nothing but a cash grab and they need555to be banned. Now, what is the VA doing right now to ensure our556veterans are not paying twice for the same paperwork at557closing?558 Mr. Zondervan. Thank you for that question. We look at559data. Our systems evaluate data and if there is any evidence of560misuse or inappropriate fees being charged, we do work with the561lenders to recoup those fees back. If we receive complaints562from veterans, we do a full file loan review. If we do find563that there are overages and charges, those are actually paid564back by the lender.565 Mr. Hamadeh. They get paid back to the veteran?566 Mr. Zondervan. To the VA because----567 Mr. Hamadeh. Now, right now the VA caps seller concessions568at just 4 percent, as you know, now while FHA and USDA allow 6569percent. In a red hot market like Phoenix, that 2 percent570difference can sometimes be the difference-maker between571winning and losing a home. Now, sellers see a VA offer and572realize they are getting less help with closing costs and573immediately choose the FHA buyer instead. Now, our veterans are574getting squeezed out of the market they fought to protect. Now,575does the VA support raising the seller concessions cap to 6576percent to align with the other Federal agencies?577 Mr. Zondervan. Thank you for that question. Seller's578concessions, it is kind of, you know, the higher you go on the579seller's concessions, it can create some issues with cost580because it is--what we have seen is that the lenders will--or581the person selling the home, when you have higher concessions,582that sometimes causes them to raise the price on the home. It583does not necessarily help with affordability. That is one of584the things that we are looking at. We will be glad to work with585the committee to continue to look at that. We currently are at5864 percent, but we do want to make sure that whatever decision587we make, it will continue to protect the veteran and not cost588them more down the road.589 Mr. Hamadeh. Yes, of course. I am about common sense. Right590now, FHA, USDA are 6 percent. It seems to make sense to me to591align the VA with FHA and USDA. My family is in real estate. I592am very familiar with housing and I know the unintended593consequences of that, what you are talking about. That is not594what we are seeing. I would encourage you to go back to the VA595and try to align that up with the FHA. Okay?596 Mr. Zondervan. I will be glad to take that into597consideration.598 Mr. Hamadeh. Now, the VA has identified 436 counties across59931 states that do not have enough certified appraisers to meet600demand. The VA demands 3 to 5 years of experience for601certification, while the FHA only requires 12 to 18 months.602Now, that gap is forcing our veterans into longer wait times603and much higher fees, sometimes $600 to $1,300 per appraisal604versus just $400 to $700 on the FHA side. Is the VA willing to605reduce its experience requirements to align with FHA standards606and get more qualified appraisers into the pipeline?607 Mr. Zondervan. Thank you for that. We are absolutely608willing to consider looking at our requirements and reducing609those to help.610 Mr. Hamadeh. How are you doing that?611 Mr. Zondervan. I am working with my staff right now to612determine the balance between what is required versus ensuring613that the product that is delivered is still a quality product.614I am looking forward to our modernization efforts, which will615help us with the quality control of appraisals, which will then616also help us reduce the requirements before a VA--before an617appraiser can become part of the panel.618 Mr. Hamadeh. Yes, but it goes back to my previous question.619We just got to align up with what FHA is doing. It seems like620it is common sense to me, and I know it is common sense for our621veterans as well. Thank you.622 Mr. Van Orden. The gentleman yields.623 The chair now recognizes Representative King-Hinds from the624Northern Mariana Islands.625 Ms. King-Hinds. Thank you very much for your time today.626 Earlier there was a lot of focus on how do we make things627better for our vets. I kind of want to just start off and get628your thoughts on what has the VA done to modernize the home629loan program in recent years.630 Mr. Zondervan. Thank you for that question. Part of our631modernization efforts is what we call guaranteed remittance. It632has four different parts where we use Application Programming633Interface (API) to gather data and to be able to evaluate634information. We have implemented our first part of that635modernization 100 percent back in November 2024. We are about63683 percent with the second API and about 34 percent with the637third.638 Although our priority is partial claims right now, once we639have partial claims implemented, we will continue to focus on640getting guaranteed remittance to full production, as that is641one of the things that our stakeholders have asked for and it642is one of my priorities.643 Ms. King-Hinds. That is good to hear. Are you familiar with644the Commonwealth of the Northern Mariana Islands (CNMI)?645 Mr. Zondervan. Somewhat.646 Ms. King-Hinds. Somewhat. You know, one of the challenges647that we have out there, and I was reading the written submitted648testimony of the second panel, the folks that are coming right649behind you, and they were talking about shortage of housing650available in general. Right. That is a challenge out here. That651is not the challenge out in the Northern Mariana Islands. I652think more outreach with regards to the programs that you653provide needs to be done so that, you know, the vets out there654know, right, that they have this opportunity and the ability to655avail of this program.656 I think Abe has mentioned that Arizona, he has a lot of657veterans who are living in Arizona. Well, we have the second658highest enlistment rate per capita across any State or659territory. You know, folks are coming back home and this660program is incredibly useful. That is why I want to thank the661chairman for taking the lead with me to sponsor the Heroes662Owning and Materializing Equity (HOME) Act, which addresses or663attempts to close in some of the gaps by explicitly requiring664that the VA does an outreach to places like the CNMI.665 Ranking Member Pappas mentioned that, you know, the666priority right now should be how do we make housing more667affordable? I think it is the President's priority as well to668make home ownership more affordable. What are you doing toward669that effort?670 Mr. Zondervan. Thank you for that question. The VA Home671Loan Program is already a fantastic program. It is the best672option for veterans out there. I am willing to work with the673committee if you have any legislative proposals that you would674like for us to view or provide technical assistance. We do want675to help make it more affordable, so any opportunities that676there are, we will be glad to work with your committee and our677stakeholders as well.678 Ms. King-Hinds. If you were to give a suggestion in terms679of what policies are standing in the way to be able to open up680that path, what would it be?681 Mr. Zondervan. Thank you for that question. I do not have a682specific suggestion at this time. You know, our program, as I683stated, has a lot of benefits already. If you have ideas on how684we could make it better, we would welcome that and we will work685with you.686 Ms. King-Hinds. All right. I yield back, Mr. Chairman.687 Mr. Van Orden. The gentlelady yields back.688 I now recognize myself for 5 minutes.689 Who writes the requirements for the--so I just want to talk690a little bit about some of the stuff that Ranking Member Pappas691was saying and also my Republican colleagues. About this692appraisal thing, it is fascinating to me. How long is the693residency for a family practice physician? It is 3 years. If694you can do a residency to become a family practice physician in6953 years, why would you take 5 years to be an appraiser? I am696not trying to degrade appraisers. It is, you know, it is a697great vocation. I just do not see, you know, 5 years is a very698long time.699 It is not just the fact--and I understand the times for700getting an appraisal, you are right, you know, they are701generally on par. I have never had a problem with it. When you702are talking about 5 years, that is 5 years of a bunch of703different people doing essentially repetitive tasks. To me,704that looks like another VA jobs program. You are paying for705these other people to train them as an apprentice to look at706paint chips and stuff like that. It just seems like a waste of707time and money, and we cannot waste time and money anymore.708 Who writes these requirements? I mean, there is a bunch of709people like, hey, let us pile on all these requirements to make710it take a half a decade to become an appraiser? Who writes711those?712 Mr. Zondervan. Thank you for that question. I fully agree713with you. I am new to this program.714 Mr. Van Orden. I know.715 Mr. Zondervan. However, there is a lot of opportunity for716us to reduce that 5-year significantly. I will be working on717that with my staff. It is within my control to change that.718 Mr. Van Orden. It is. I am going to admit it, I knew the719answer to that question before I asked it.720 One of the greatest slogans ever for advertising was Nike721when they said, just do it. The Trump administration has taken722that and they say, just do things. This is something that you723can do. You are empowered by your position to do this, and it724could really be significant. Very happy about that.725 Now, Ranking Member Pappas, I want you to understand that726this is a bipartisan thing. You had three people talking about727this. I am not happy at all with the fact that it is going to728be June before partial claims is done. That timeline is too729long. You know what Chris' concerns are absolutely valid. We do730not want veterans getting booted out of their homes. Right? I731want you--I do not know if you can say yes right now, but I732want to talk to you later about this. I want to guarantee that733you are not going to foreclose on any single veterans if you734have the ability to do so until this partial claims gets done.735Okay? If that is in your power, I need to know that. Then I736want your word if you can do that.737 That is really all. Chris, do you want to do a second738round? Do you have more questions?739 Mr. Pappas. I think I am good.740 Mr. Van Orden. You guys good? Okay. Well, very well. With741that, I am going to yield back because my buddy has got all the742questions.743 Thank you very much for coming, gentlemen. You are excused.744I hope you stick around and listen to the second panel.745 Please be seated. We will have you stand up in a sec.746 Our second panel, we are going to hear from the following747witnesses. Our first witness is Mr. Owen Lee, 2026 chair-elect748of the Mortgage Bankers Association (MBA). Our next witness is749Mr. Kurt Thompson, executive committee member at the National750Association of Realtors (NAR). Our final witness is Ms. Alice--751is it, Alice? Alys, that is a very neat name, Cohen, director752of Federal Housing Advocacy at National Consumer Law Center753(NCLC).754 I would like to welcome you very much to the table, and I755ask now that you would stand and raise your right hand. Sorry.756You are very eager. That is great.757 [Witnesses sworn.]758 Mr. Van Orden. All right. Thank you very much. Let the759record reflect that the witnesses have answered in the760affirmative.761 Mr. Lee, you are now recognized for 5 minutes to deliver762your testimony.763764 STATEMENT OF OWEN LEE765766 Mr. Lee. And members of this subcommittee, thank you for767the opportunity to testify today on behalf of the Mortgage768Bankers Association. My name is Owen Lee. I serve as the MBA's7692026 chair-elect and I am also chief executive officer of770Success Mortgage Partners (SMP). I have more than 30 years of771experience in residential real estate finance as an independent772mortgage banker.773 I founded Success Mortgage Partners, headquartered in774Plymouth, Michigan, in 2002. Our firm originates mortgages in77543 states and the District of Columbia, closing billions of776dollars of loans every year. Today, SMP is a top 100 VA lender.777Since 2020, we have closed between 100-and $220 million loans778each year. I am proud that over the last 6 years SMP has helped779more than 3,100 veteran families secure the dream of home780ownership.781 Many of those VA loan closings have been memorable,782especially one very close to me. It involved my cousin, retired783Sergeant First Class Damien Siwik. Sergeant Siwik is a 22-year784Army veteran and recipient of the rarely received Soldier's785Medal, one of the highest honors a soldier can receive for an786act of valor in a noncombat situation. During his Army service,787he completed multiple tours of duty on the Demilitarized Zone788(DMZ) in Korea and then Honduras, Egypt, Iraq, and Afghanistan.789He retired from the Army nearly 10 years ago.790 As a soldier, my cousin never lived in a singular posting791for more than 3 years. He made the achievement--this made the792achievement of home ownership quite difficult. Sergeant Siwik793was also judged 70 percent disabled upon his discharge due to794circumstances directly related to his service. It was with795immense pride that on January 17th of 2025, I helped my cousin796become a homeowner for the first time at age 58.797 The MBA is honored to have productive working relationships798with the full House Veterans' Affairs Committee and this799subcommittee, including your highly professional staff. I want800to highlight a few of MBA's recommendations to strengthen and801improve the VA Home Loan Program. More details can be found in802my written testimony.803 I appreciate the full committee passing H.R. 1815, the VA804Home Loan Program Reform Act, which last year created a805practical and permanent partial claim program, aligning with806existing programs across other Federal housing agencies. This807law ensures veterans are not left behind during moments of808financial stress. MBA commends the VA for their transparent and809open drafting table process to implement the new Partial Claim810Authority, but would encourage the agency to improve their811draft waterfall proposal in the following ways.812 A borrower should not have to agree to a monthly payment813increase before receiving other home retention options that do814not result in a payment increase. It is also important for the815policy to explicitly allow servicers the option to offer816regular forbearance so a veteran homeowner does not have to817commit to a repayment option before their hardship has ended818up.819 Beyond the partial claims implementation, MBA would also820encourage the VA to make certain other programmatic changes.821Among a list included in my written statement: to align minimum822property requirements with Fannie Mae and Freddie Mac; to823reform the Interest Rate Reduction Refinance Loan (IRRRL)824program to improve its effectiveness and assure ensure it825reflects today's mortgage market; to modernize the allowable826fee schedule structure that VA mortgage servicers can charge to827process an assumable loan; and to align the agency's fee828documentation requirements with how third-party services are829actually billed and documented.830 I would be remiss if I did not mention that MBA stands by831its traditional position that the use of any revenue generated832by VA home loan funding fees should only be used for the833benefit of the VA's Home Loan Program itself.834 In closing, I want to thank the committee for its time and835attention on ways to reduce costs and improve efficiencies with836this vital program, ensuring it better serves veteran families837as they pursue their slice of the American Dream, and I look838forward to answering any questions you may have.839840 [The Prepared Statement Of Owen Lee Appears In The841Appendix]842843 Mr. Van Orden. Thank you, Mr. Lee. The written statement of844Mr. Lee will be entered into the hearing record.845 Mr. Thompson, you are now recognized for 5 minutes to846deliver your testimony.847848 STATEMENT OF KURT THOMPSON849850 Mr. Thompson. Thank you, Chairman Van Orden, Ranking Member851Pappas, and distinguished members of the subcommittee. My name852is Kurt Thompson and I am the broker owner of RE/MAX Liberty in853Westminster, Massachusetts, where I have been helping buyers854and sellers for over 29 years. I am testifying today on behalf855of the more than 1.4 million members of the National856Association of Realtors. I am also a veteran. I served for 8857years with the Army Reserve and one of the 157th Air Refueling858Wing in New Hampshire's Air National Guard.859 The VA Home Loan Program helped me to achieve home860ownership, which is why, as a standard practice, I ask every861buyer whether they have VA eligibility. I know from my own862experience that the no down payment feature can be the863difference between owning a home or continuing to rent.864 Before I turn to where I think the program can be865strengthened, I want to thank this subcommittee for its866leadership in passing H.R. 1815. This legislation will help867ensure our Nation's veterans utilizing the VA benefit have868access to professional representation when making one of the869most important decisions of their lives.870 That said, even the strongest loan benefit can only do so871much when the availability of homes is in such short supply.872NAR research estimates that Americans face a shortage of almost8735 million homes in my market. In Massachusetts, most entry874level buyers are looking in the 300,000 to 500,000 range and875there simply are not enough homes at that price point. The876ability for veterans to purchase with no down payment is VA877loan program's greatest strength, and it is most meaningful878when affordable homes are within reach.879 Strengthening the benefit and increasing supply are880complementary goals, and both are essential. This is why NAR881strongly urges Congress to pass the 21st Century Road to882Housing Act, H.R. 6644, and the More Homes on the Market Act,883H.R. 1340, which will unlock existing inventory by modernizing884the capital gain exemption.885 Turning to the program itself, I want to spend most of my886time on appraisals because that is where I see the issues most887clearly in my day-to-day work. The biggest competitive888challenge I see with VA buyers is closing costs leading to889appraisal risk. Many of my veteran buyers have limited cash on890hand, and closing costs largely cannot be rolled into the VA891loan. This means that I often need to negotiate seller892concessions. In a hot market like mine, sellers have a certain893expectation of the amount of proceeds they will receive and894from the sale of their property. To get the seller the number895they need and secure the concession my clients need, the offer896has to go above the asking price. As a result, the appraisal897has to come in at that higher number. If it does not, the898seller has to either take less or walk away. When they have899another offer on the table without that complication, that is900where veterans lose homes.901 Another issue I see is that property conditions are902generally acceptable for conventional loans are required to be903flagged by VA appraisers. These additional requirements can add904time and cost or even kill purchases, giving sellers yet905another reason to favor conventional or cash offers. NAR906recommends Congress direct VA to align its minimum property907requirements with Government Sponsored Enterprises (GSE)908standards, modernizing appraisal timelines, and expand the909appraisal pool.910 Beyond appraisals, there is another issue that represents911real untapped potential, which is loan assumptions. VA loans912are assumable, which in today's high interest rate environment913sounds like an incredible feature. A buyer can take on a914seller's 2.5 or 3 percent mortgage instead of borrowing at915today's rates, which would have significant impact on the916monthly payment. However, I cannot think of a single917transaction in my career where an assumption is actually918closed. The process can take up to 90 days or more, and most919buyers cannot bridge the equity gap in cash.920 The assumption benefit exists on paper, but in practice it921rarely pencils out. NAR recommends VA reevaluate the cap on922lender compensation and that Congress explore financing923solutions to close the equity gap. Congress should also address924veterans losing their entitlement when a nonveteran assumes925their loan.926 The VA Home Loan Guarantee Program has been one of the most927important benefits our Nation offers and I am proud to have928benefited from it personally. When it works well, it is a929powerful path to achieving the American Dream of home ownership930and the kind of wealth-building that can last generations. This931program deserves to be the best it can be and NAR stands ready932to work with this committee and VA to make that happen.933 I thank you for your time and I welcome your questions.934935 [The Prepared Statement Of Kurt Thompson Appears In The936Appendix]937938 Mr. Van Orden. Thank you, Mr. Thompson. The written939statement of Mr. Thompson will be entered into the hearing940record.941 Ms. Cohen, you are now recognized for 5 minutes to deliver942your testimony.943944 STATEMENT OF ALYS COHEN945946 Ms. Cohen. Thank you. Chairman Van Orden, Ranking Member947Pappas, and members of the subcommittee, thank you for the948opportunity to testify on behalf of the low-income clients of949the National Consumer Law Center regarding the VA Home Loan950Guarantee Program. I am Alys Cohen, director of Federal Housing951Advocacy at NCLC, and the daughter of a proud Air Force952veteran. We support the goal of promoting affordability for953veteran homeowners and we recognize the key role of the VA Home954Loan Program. Today I will address the key tool VA has to make955veteran home ownership more affordable, improving its hardship956options, and I will discuss several issues relating to VA957lending policies, all of which would have limited effect on958today's affordability crisis, in great part because those959challenges are marketwide.960 The most important step the VA can take to promote961affordability for veterans is to help them retain their homes962when feasible and avoid devastating home loss when they face963financial hardships, including those related to their service.964These home retention programs keep kids in school, stabilize965neighborhoods, prevent home equity loss, and allow veterans to966avoid an unforgiving rental market. However, the mortgage967relief options available for veteran borrowers remain less968favorable than the options available to other borrowers with969federally backed mortgages, and a higher share of veteran970borrowers are moving to active foreclosure.971 The situation for delinquent VA borrowers should improve972due to passage of the VA Home Loan Program Reform Act, and we973thank members of this committee for your leadership on that974legislation. However, the newly authorized partial claim975program has not yet begun and VA's draft handbook proposals do976not fulfill the promise of the legislation, especially with977respect to affordability, primarily because the agency's978proposal requires a homeowner to accept up to a 15 percent979increase in their monthly payment before accessing the partial980claim. Of the roughly 90,000 VA borrowers who are seriously981delinquent on their loan today, we estimate that over 30,000982will face a payment increase under this approach, which on983average would raise their monthly payment by $150 per month.984 VA includes other options that create more affordable985payments, but these are not offered until later in the draft986waterfall. We sincerely appreciate the fact that VA placed its987proposed waterfall on the drafting table for comment. We are988hopeful that VA will make changes as a result of the consistent989feedback it has received to change the order of its waterfall990to prioritize affordability.991 The VA's proposal, while understandably seeking to be992sensitive to the need to limit term extensions and total993amounts due, is out of step with Fannie Mae, Freddie Mac, and994FHA, which only consider payment increases as a last resort, if995at all. To promote affordability truly, VA should ensure that996veteran borrowers have options that promote affordability997first, which will save money for the VA fund, veteran998borrowers, and mortgage servicers.999 In addition, we urge the VA to adopt measures to hold off1000foreclosures until the partial claim program becomes widely1001available. We have suggested full pay forbearance, which would1002allow servicers to accept monthly payments again for veterans1003who can resume payments. This would meet the goal that the1004chairman just expressed about stopping foreclosures until the1005new program is up and running.1006 Aside from adjustments to its home retention program, the1007other steps VA could take will only help affordability around1008the edges at best or would seek to address issues not within1009VA's control. The problems of housing supply and overall market1010affordability are problems for all home buyers and mortgage1011borrowers.1012 The VA's appraisal and minimum property standards ensure1013the soundness of the homes veterans purchase and catch faulty1014appraisals. Any change should be first examined for fair1015lending compliance and any needed additional system1016accountability. Any steps the agency takes on underwriting1017should avoid changes that could undermine loan performance or1018unnecessarily narrow program access. VA's unique underwriting1019guidelines with a focus on the borrower's residual income have1020led to an impressive track record. Any reductions in closing1021costs will be limited, if useful, and cannot have a significant1022impact on market-wide affordability issues. VA should also1023explore a small dollar mortgage loan pilot in coordination with1024FHA.1025 Thank you for the opportunity to testify. We urge VA to1026stand up the partial claim, with a new waterfall, in a way that1027protects the fund, limits servicer burden, and stabilizes home1028ownership.10291030 [The Prepared Statement Of Alys Cohen Appears In The1031Appendix]10321033 Mr. Van Orden. The gentlelady's time has expired.1034 The chair now recognizes Ranking Member Pappas for 51035minutes.1036 Mr. Pappas. Thanks.1037 Mr. Van Orden. Oh, excuse me.1038 Mr. Pappas. Go for it, Mr. Chairman.1039 Mr. Van Orden. Ma'am, your written statement will be1040entered into the record.1041 The chair now really actually recognizes Ranking Member1042Pappas. Thanks.1043 Mr. Pappas. Well, thanks very much, Mr. Chairman. I1044appreciate everyone's testimony here today.1045 Mr. Lee, your team testimony that was submitted to us, you1046said, ``Veterans today, just as in the early 1980's, face one1047of the most challenging housing affordability environments in1048decades, marked by elevated interest rates, limited inventory,1049and rising home prices.'' I am just wondering for all the1050witnesses here, you have touched on this, but can you stress1051what the major headwinds are facing buyers right now, Mr. Lee,1052if you can start?1053 Mr. Lee. I think that the largest headwind facing buyers is1054supply. It is the supply of inventory of homes for sale. The1055supply of inventories of homes for sale is up in relation to1056where it has been since COVID, but it has never recovered in1057terms of there not being enough houses for sale.1058 Obviously, we have a supply problem. The amount of homes1059that we used to build in this company--or country up to the1060Great Recession has never recovered from after the Great1061Recession. Anything that can be done in order to bring a1062greater supply of homes onto the market, building new and/or1063anything that can be done to get people to put more homes on1064the market, like the piece of legislation to modernize and step1065up the capital gains tax deduction for the sale of your primary1066residence, would help this situation quite a bit.1067 Mr. Pappas. I see our realtors nodding. Anything else you1068want to add in terms of headwinds?1069 Mr. Thompson. Absolutely. It is definitely inventory supply1070and shortage. We estimate there is about a 5 million home1071shortage. That translates to, roughly, if we could increase1072production by 400,000 units, it would take us easily 12 to 131073years to catch up to demand. That is a big deal. There are1074provisions around the table. H.R. 1340 is one of those bills1075that can assist, as is H.R. 6644.1076 Mr. Pappas. Thank you. Ms. Cohen.1077 Ms. Cohen. Agree about supply. It is obviously a big issue.1078Prices are also quite high. Having institutional investors1079involved in the market is also making a home out of reach for a1080lot of people. It would be a mistake to only look at home1081buyers and not look at staying in the home. I would just add1082that once we get people into homes, we need to make sure that1083they can afford to stay in their homes. Thank you.1084 Mr. Pappas. Well, thanks, Ms. Cohen. I was going to note in1085your written testimony you referred to that, saying the most1086affordable home is the one where they currently reside.1087Actually, Mr. Lee, you said that. Ms. Cohen, you said, ``The1088most important step that VA can take is to promote1089affordability for veterans and help them avoid unnecessary,1090devastating home loss when they face financial hardships.''1091 I wanted to just ask about the end of the VASP program. I1092appreciate the chairman's comments about how we can stave off1093foreclosure for veterans that are anticipating this partial1094claims program coming online. Did the end of VASP negatively1095impact veterans in the VA Home Loan Program, and has it had any1096impact on the foreclosure rate overall?1097 Ms. Cohen, I do not know if that is something you want to1098take.1099 Ms. Cohen. We work with attorneys around the country who1100represent veterans and other borrowers with federally backed1101mortgages. After the VASP program was canceled, there were many1102homeowners who were facing hardship, who needed a solution that1103was just out of reach because the new program was not yet1104online. It has definitely pushed more people to the brink of1105foreclosure and home loss given that we have not had a program1106in this gap period.1107 Mr. Pappas. Yes. Mr. Lee, any observations there?1108 Mr. Lee. No, we just wanted to reiterate our thanks to1109everybody on this committee on both sides of the aisle for the1110help in getting the Partial Claims Act passed. We would commend1111the VA for their drafting table approach because that would1112promote a better solution faster, even though we would like to1113see it as soon as possible. I can promise you that our members1114and our servicing members are readying themselves to implement1115it as fast and professionally as possible as soon as we get it.1116 Mr. Pappas. Yes. Mr. Thompson, thanks so much for your1117service through the New Hampshire Air National Guard. I should1118have led with that at the top. We appreciate what the Guard1119does for all Granite Staters. You talked about the disparity1120that can exist with veteran buyers and some of the challenges1121that they have with seller concessions and, you know, having to1122offer above asking price. How do we work to level that playing1123field?1124 Mr. Thompson. Absolutely. One of the things that came up1125was increasing the concession from 4 to 6 percent. That would1126make a huge difference, in my opinion. One of the areas where1127we can streamline or make things more affordable for our1128veterans is when we are able to work with the seller to provide1129a concession toward those closing costs to minimize the amount1130of cash coming in.1131 In terms of the minimum property requirements, that is a1132challenge as well. Many times veteran buyers take themselves1133out of contention even before they get to the point of offer,1134knowing that the property may not be in a condition that is1135going to pass those requirements. As good stewards of our1136veteran buyers, we do not want to walk them into landmines when1137resources may be limited. It is very important that we1138streamline those issues as well.1139 Mr. Pappas. Thank you. My time is up, so I yield back.1140 Mr. Van Orden. The gentleman yields back.1141 The chair now recognizes Representative Hamadeh from the1142great State of Arizona.1143 Mr. Hamadeh. Thank you, Chairman.1144 Mr. Van Orden. You are welcome.1145 Mr. Hamadeh. Mr. Lee, from the lender side of the table,1146where is the single biggest source of delay or added costs in1147the VA loan process as compared to conventional or FHA loans?1148 Mr. Lee. Well, the MBA would like to see a modernization of1149both the appraisal standards and how appraisers are approved1150for the process. The MBA does believe that 5 years is too long.1151We would love to see something much closer to the way the rest1152of the market operates. A lot of states have adopted a 2-year1153period. That we think would be sufficient and that would speed1154along that process.1155 Also, you know, as we have talked about, a modernization of1156the minimum property standards to bring it closer to where1157Fannie Mae and Freddie Mac are with the GSEs would definitely1158streamline the program.1159 Mr. Hamadeh. Now VA still relies on manual underwriting,1160while FHA has moved to the semiautomated systems that can1161approve a loan in 2 to 7 days compared to the VA's roughly 10.1162Now, from an industry standpoint, what would automated1163underwriting do for VA loan competitiveness and for the1164veterans waiting on approvals?1165 Mr. Lee. Automated underwriting does speed along the loan1166process, especially for the loans that are, you know, fit more1167right away into the box of underwriting where the underwriting1168is simple, the income is simple, so that would be helpful. We1169do not think it is the absolute major choke point of getting a1170VA loan approved as fast as possible.1171 Mr. Hamadeh. Right. If it could speed it up by maybe 8 to 31172days compared to FHA, that would make a big difference.1173 Mr. Lee. It would make a difference and it would reduce the1174stigma that sometimes on a VA loan for the fact that it might1175be harder or take longer to get to the closing table. Sure.1176 Mr. Hamadeh. I am all about just making it simple. You1177know, if FHA is doing something, I do not see why VA is taking1178a longer time. They are both Federal programs.1179 Now, Mr. Thompson, I hear from veterans in Phoenix, Peoria,1180Surprise, Glendale, that there is a real stigma against VA1181loans in competitive housing markets. Listing agents falsely1182claim that VA loans take longer to close or have a higher1183denial rate when the data shows it is just the opposite. VA1184loans actually have the lowest denial rate of any loan type.1185Now, from your experience in the field, how pervasive Is this1186stigma and what can be done to educate the real estate1187community?1188 Mr. Thompson. I think that it is a timeline issue. So many1189times when you are looking at a transaction, the appraisal1190comes in at a certain point after home inspections, purchase,1191and sales. When that is coming in, there is a potential for a1192property to have a risk exposure on those elements within the1193minimum property requirements, which require either a seller to1194take action and repair them, the consumer to take action or1195repair them, or the transaction could become terminal. There is1196an added risk over, say, a conventional or a cash purchase.1197Unfortunately, in the market, that can cause some challenges.1198 Now, I can tell you, I had a client just a year and a half1199ago, they accepted the VA loan over a higher cash offer. There1200are still sellers out there that value the good work of our1201servicemen and women, and we will do the right thing, but we1202cannot rely on that. We need to try to streamline those1203programs to minimize friction for our veterans.1204 Mr. Hamadeh. Yes, that is great. There are so many brave,1205patriotic Americans that are willing to support our1206servicemembers as well.1207 Mr. Thompson. Absolutely.1208 Mr. Hamadeh. I want to thank you all, and I yield back, Mr.1209Chairman.1210 Mr. Van Orden. The gentleman yields.1211 I now recognize myself for 5 minutes.1212 Mr. Lee, you said something really interesting I thought1213was kind of--so right now, when we look at this waterfall, the1214VA is intending on making servicemembers who are having issues1215making their mortgage, the partial claim mandatory, out of the1216gate. Is that correct?1217 Mr. Lee. I do not believe that is correct, but we would1218like to see some changes in the waterfall.1219 Mr. Van Orden. Yes, we need to--I mean, we have the copy of1220it and all that stuff, but we need to--me and Chris got to sit1221down and look at this collectively and our staffs to make sure1222we agree with it. With Chevron deference, that finding, if it1223does not comport to our intent, then that rule will not stand.1224As opposed to having to undo something, I would prefer to make1225sure that we nail it, right, so let us, if it is cool with you,1226let us talk about that later to get, I mean, to really get down1227to brass tacks on this so we do not have to undo something that1228the administration does.1229 Ma'am, Ms. Cohen, I want you to know that we were not,1230like, blowing you off. We are discussing the points that you1231were bringing up to make sure that we can have a really good1232discussion at the time. I appreciate you doing that stuff.1233There are some things that we do need to address about VASP and1234the reason that it went away is that the previous1235administration wrote what would have been an $18 billion check1236without congressional authorization. My concern is, and I1237stated this earlier, the two best programs that the U.S.1238Government has ever developed or the Veterans Home Loan1239Guarantee Program and the GI Bill. For someone to1240administratively decide that they can magically create an $181241billion problem set without talking to us about it, directly1242contravenes the will of Congress.1243 We do not want to see any veteran removed from their home1244ever. I do not want to see that happen. We have to make sure1245that we maintain the integrity of the program. Every single1246person in the future that wants to buy a home or is currently1247on Active Duty has the availability to use this program. That1248is the intent. That is why we did the partial claim thing, to1249align it with other Federal lending programs. I know that1250because we wrote it.1251 There is one other thing.1252 Ms. Cohen. Mr. Chairman, may I respond?1253 Mr. Van Orden. Yes, sure, go ahead.1254 Ms. Cohen. First of all, my father went to college on the1255GI Bill and he bought the house I grew up in with VA benefits.1256 Mr. Van Orden. Right. You know what I am talking about.1257 Ms. Cohen. I agree with you about that.1258 Mr. Van Orden. Yes.1259 Ms. Cohen. Second, I think the question right now is what1260can we do now before the partial claim is stood up so that1261people do not lose their homes between now and then.1262 Mr. Van Orden. Yes.1263 Ms. Cohen. You raised that issue yourself. We are1264suggesting something called full pay forbearance. People who1265can resume their payments, who will be able to qualify for the1266new system, should not be further behind because they did not1267have their payments accepted. We are suggesting that as a1268stopgap measure. It will stop them from falling further behind1269and prevent avoidable foreclosures.1270 Mr. Van Orden. Can you explain, thank you for that, can you1271explain the having to accept a 15 percent increase in their1272mortgage?1273 Ms. Cohen. The way the proposal works from VA, and it is my1274understanding that they have heard similar feedback and they1275are looking at it closely, is that the top options before you1276get to the payment, that would stay the same, or the partial1277claim, is that if you can qualify for a 30-year mortgage with1278an up to 15 percent payment increase, then you do not get to1279the next option and then you stay at that higher payment. I1280believe the goal of that was to not extend people's terms or1281total amounts due. What it gives people is an unaffordable1282payment that will lead to foreclosure.1283 Mr. Van Orden. Okay. That is exactly why we need to really1284get into the weeds. Really, a hearing like this is not really1285the setting for that. That is sitting down and looking at these1286things in detail and preempting any issues that we may have1287ahead of time.1288 Well, with that, I do not have any more questions. I want1289to thank you very much for coming today, and I appreciate your1290work. I know that your heart is exactly where ours is. That is1291making sure that every single man and woman that serves our1292Nation in uniform has the ability to live the American Dream,1293and that is home ownership.1294 Oh, you know what? My time is expired. Do you mind if I1295just ask one more thing? Hey, how much money are you into1296building a home before you even break ground?1297 Mr. Thompson. I am not qualified to ask that because it--1298answer that because it varies by location and the red tape of1299getting it through the local municipality.1300 Mr. Van Orden. Boop.1301 Mr. Thompson. There are a lot of things we can work on that1302together to streamline, and look forward to doing so.1303 Mr. Van Orden. You nailed it, Mr. Thompson. It is somewhere1304around $100,000.1305 Mr. Lee. Yes, we have been in a lot of meetings where I1306have heard between 70-and 95,000 or higher, depending upon1307where you are.1308 Mr. Van Orden. You are buying a $200,000 home for $300,0001309because there is a whole bunch of people that got 6 bosses and1310want you to fill out 400 pieces of paperwork, right?1311 Mr. Lee. Yes, sir.1312 Mr. Van Orden. That is what we need to change. That is1313where your affordability comes in. Getting rid of these damn1314bureaucrats and paperwork and just do things. All right.1315 Listen, God bless you guys. Thank you so much for coming. I1316appreciate it.1317 Mr. Lee. Thank you, Mr. Chairman.1318 Mr. Van Orden. I ask unanimous that all members may have 51319legislative days to revise and extend their remarks, including1320extraneous material. Without objection.1321 [Whereupon, at 4:39 p.m., the subcommittee was adjourned.]13221323=======================================================================13241325 A P P E N D I X13261327=======================================================================13281329 Prepared Statements of Witnesses13301331 ----------13321333 Prepared Statement of Patrick Zondervan13341335 Chairman Van Orden, Ranking Member Pappas, and other Members of the1336Subcommittee, thank you for the opportunity to appear before you today1337to discuss the Department of Veterans Affairs' Home Loan program.1338Joining me is Mr. Terry Rouch, Assistant Director for Loan Policy and1339Valuation, VBA.1340 VA's home loan program enables private lenders to offer eligible1341Veterans and service members loans that are guaranteed by the1342Department, in many cases eliminating the need for a down payment and1343mortgage insurance and making home ownership much more affordable.1344 Since the program's creation in 1944, VA has guaranteed more than134529 million home loans totaling over $4 trillion dollars.1346 This success is directly tied to VA's efforts to keep home loans1347affordable for Veterans. For example, VA limits the types and amounts1348of fees that lenders can charge, meaning Veterans can devote more1349resources to paying down interest and building equity. VA also strives1350to promote lower interest rates and administer the program so Veterans1351can take full advantage of up to 100 percent financing with no private1352mortgage insurance and a $0 down payment. VA continues to work to1353improve its Home Loan program to address market and affordability1354concerns.13551356Reducing High Closing Costs13571358 VA-guaranteed loans are made by private lenders and are subject to1359prevailing market conditions. Aside from ensuring that statutory loan1360fees required under 38 U.S.C. Sec. 3729 are paid, VA does not set the1361financial terms or impose any specific closing costs on Veterans.1362 VA does prescribe limitations, however, to protect Veterans from1363predatory lending and unreasonable or unnecessary costs. First, VA1364allows a Veteran to pay the actual costs for third-party services that1365are generally necessary for a home loan origination but only if they1366are reasonable and customary. These items include appraisals, recording1367fees, taxes, assessments, credit reports, hazard insurance, flood zone1368determinations, surveys, and title work.1369 Since VA cannot dictate third-party prices, a Veteran's cost can1370vary widely based on locality and market trends. For example, a1371national credit bureau recently announced a price increase of 3 percent1372on mortgage credit reports, which followed a significant, earlier 501373percent price rise. VA has no authority to limit a credit bureau's1374fees. If lenders have to pay the difference, they will find a way to1375pass those costs along (for example, through a higher interest rate).1376 Second, unlike some other loan programs, VA limits the amount1377lenders can charge for processing and underwriting fees. VA has capped1378that amount at 1 percent of the loan amount. This restriction helps1379ensure that lenders can properly evaluate the loan from a credit and1380business perspective without subjecting the Veteran to predatory1381finance charges.1382 Another way VA helps borrowers is by allowing unlimited seller1383contributions for closing costs. VA also permits seller concessions of1384up to 4 percent of the reasonable value for items like prepayment of1385the buyer's property taxes and insurance and paying off consumer debts.1386VA also spurs lower closing costs by allowing for the use of Attorney1387Opinion Letters as an alternative to obtaining a title insurance1388policy. This change allows for additional cost savings in localities1389where such letters are more affordable than title policies.13901391Modernization of VA's Underwriting System13921393 Most credit underwriting efforts for VA-guaranteed loans are1394performed by private lenders rather than the Department itself. Lenders1395are required to apply VA's underwriting standards and guidelines when1396approving a loan. VA allows lenders to utilize Automated Underwriting1397Systems (AUS), such as Fannie Mae's Desktop Underwriter or Freddie1398Mac's Loan Prospector systems, to assist in the assessment of credit1399risk and the evaluation of the acceptability of the loan. VA does not1400require the use of an AUS and encourages lenders to holistically review1401loan applications and make VA-guaranteed loans available to Veterans1402based on a positive review of their individual credit profile.1403 WebLGY is VA's web-based application system that helps facilitate1404the origination of VA-guaranteed home loans. WebLGY helps Veterans1405obtain a Certificate of Eligibility (COE), initiates appraisal orders,1406and processes Loan Guaranty Certificate requests. WebLGY connects with1407other external technology systems and applications, such as our1408automated appraisal management service, which analyzes thousands of1409business rules to ensure compliance with appraisal policies and1410quality.1411 VA has made upgrades and continues to work on development of new1412functionality within our systems. For example, the Guaranty Remittance1413Application Programming Interface (API) will enable lenders to1414streamline part of their post-closing operations by avoiding the need1415to manually input data to obtain the VA Loan Guaranty Certificate. VA1416began development and released the first series of enhancements to1417WebLGY in 2023 and continues to make incremental strides toward full1418implementation of VA's end-to-end API technology solution.1419 In 2023, VA launched ServiceNow, a cloud-based customer service1420management portal used by VA partners, such as lenders, servicers,1421appraisers, and Veterans, who can interact with VA Loan Guaranty 241422hours a day, 7 days a week by submitting support tickets to receive1423answers to general loan questions, check loan status, or other issues.1424 Other systems updates include the launch of our Program Participant1425Management system. This new, automated self-service tool released last1426year allows lenders to manage profiles, submit annual renewal requests,1427and staff registration. This month, VA launched an enhancement to VA's1428Mobile App to allow Veterans to view their COE from their mobile1429phones. In the first week, VA reports that more than 35,000 downloads1430of COEs were completed by using the mobile app.1431 Last, the Veterans Affairs Loan Electronic Reporting Interface or1432VALERI, our loan servicing and administration system, is undergoing1433updates to accommodate the new Partial Claim program launching in the1434upcoming months.14351436Competing in Tight Markets14371438 VA home loan demand remains strong in tight markets offering limits1439to the cost lenders charge Veterans at closing, as well as no down1440payment options and no private mortgage insurance. Veterans continue to1441use their home loan benefit amid increasing affordability strains1442experienced by buyers in today's housing market. VA purchase loan1443volume is up 4 percent year over year.1444 VA notes that other factors may impact a Veteran's ability to1445become homeowners, as affordability extends beyond interest rates and1446the price of purchasing a home. The total cost of homeownership goes1447beyond the first payment and includes factors such as increases in1448property taxes, homeowners' association fees, insurance costs, and1449unexpected home repairs, or job-loss that impacts affordability.14501451Improving the Appraisal Process and Minimum Property Requirements14521453 VA appreciates past feedback from Congress and strives to ensure1454our appraisal process is efficient and timely during the lifecycle of1455the appraisal order. VA closely monitors the quality, timeliness, and1456cost of these appraisal reports to serve the interests of Veterans,1457lenders, servicers, and VA. As of February 2026, average VA appraisal1458timeliness across the country is about 7 business days. Currently, VA1459is in the process of updating its appraisal fees in many areas of the1460country to ensure VA appraisal assignments remain competitive in the1461marketplace.1462 Over the years, sellers and real estate agents have developed1463misperceptions about how VA appraisals work. While some issues were1464factual many years ago, and caused delays to the home buying process,1465many do not exist today.1466 A common misperception is that a VA appraisal is a home inspection1467and that any identified minimum property requirements (MPR) issues1468would derail the homebuying process. To the contrary, the VA home loan1469appraisal is an objective, expert opinion on fair market value and is1470one of the most important tools in helping VA determine whether the1471Government and taxpayers should assume the risk of guaranteeing a1472portion of a Veteran's loan. The appraisal also helps identify major1473deficiencies concerning safe, sound, and sanitary conditions.1474 However, VA agrees the appraisal is not a substitute for a home1475inspection and is committed to improving the appraisal process to help1476lessen the burden on Veterans. VA is developing several actions to1477reduce and simplify the MPRs outlined in VA regulations, handbook1478policies, and procedures. For example, VA recently updated the VA1479Lender's Handbook, chapter 12, with the removal of several MPRs, to1480streamline the appraisal process, while continuing work toward1481finalizing these changes. VA is also in the process of enhancing1482digital capabilities to better track the appraisal order from1483notification to acceptance, with improved analytics and communications.14841485Conclusion14861487 VA will continue to serve the Nation's Veterans through the VA Home1488Loan program, which is centered around the unique needs of Veteran1489borrowers. Mr. Chairman, we will continue to provide Veterans with a1490safe and viable loan guaranty option, but more education is needed to1491dispel longstanding myths about the program and Veteran borrowers.1492Thank you for your continued support of our programs and for this1493opportunity to speak today.1494 This concludes my testimony, and I welcome any questions that you1495or other Members of the Subcommittee may have.14961497 Prepared Statement of Owen Lee14981499 Chairman Van Orden, Ranking Member Pappas, and members of this1500Subcommittee, thank you for the opportunity to testify today on behalf1501of the Mortgage Bankers Association (MBA).\1\ My name is Owen Lee, and1502I serve as MBA's 2026 Chair-Elect and Chief Executive Officer of1503Success Mortgage Partners (SMP). I have more than 30 years of1504experience in residential real estate finance as an independent1505mortgage banker (IMB).1506---------------------------------------------------------------------------1507 \1\ The Mortgage Bankers Association (MBA) is the national1508association representing the real estate finance industry, an industry1509that employs more than 275,000 people in virtually every community in1510the country. Headquartered in Washington, DC, the association works to1511ensure the continued strength of the Nation's residential and1512commercial real estate markets, to expand homeownership, and to extend1513access to affordable housing to all Americans. MBA promotes fair and1514ethical lending practices and fosters professional excellence among1515real estate finance employees through a wide range of educational1516programs and a variety of publications. Its membership of more than15172,000 companies includes all elements of real estate finance:1518independent mortgage banks, mortgage brokers, commercial banks,1519thrifts, REITs, Wall Street conduits, life insurance companies, credit1520unions, and others in the mortgage lending field. For additional1521information, visit MBA's website: www.mba.org.1522---------------------------------------------------------------------------1523 I founded Success Mortgage Partners, headquartered in Plymouth,1524Michigan, in 2002. The firm is licensed to originate mortgages in 431525states and the District of Columbia. SMP closes billions of dollars in1526mortgage loans every year. Over the course of my career, the firm has1527closed thousands of VA loans, averaging between $100 million and $2201528million in closings each year since 2020. Indeed, I am proud that over1529the last 6 years SMP has helped over 3,100 veteran families secure the1530dream of homeownership.1531 Our firm is honored to be among the top 100 lenders - including1532banks, credit unions, and IMBs - in VA loan volume, originating and1533closing loans for those who have served our country. I am committed to1534making sure this benefit is available for veterans and service members1535for generations to come.1536 Many of those loan closings have been memorable. For me personally,1537none more so than one that took place last November that involved my1538first cousin, retired Sgt. First Class Damien Siwik. Sgt. Siwik is a153922-year Army veteran and a recipient of the rarely received Soldier's1540Medal, one of the highest honors a soldier can receive for an act of1541valor in a non-combat situation. During his Army service, he completed1542multiple tours of duty on the DMZ in Korea, as well as tours in1543Honduras, Egypt, Iraq, and Afghanistan. He retired from the Army almost15445 years ago.1545 As a soldier, my cousin never lived in a singular posting for more1546than 3 years. This made the achievement of homeownership quite1547difficult. Sgt. Siwik was also judged 70 percent disabled after his1548discharge due to circumstances directly related to his service. So it1549was with immense pride that on January 17, 2025, I helped my first1550cousin become a homeowner for the first time at age 58.15511552Background15531554 MBA has enjoyed a long and productive relationship with the full1555Committee. We appreciated the opportunity to have fielded witnesses at1556the request of this Subcommittee five times since 2022 in support of1557needed policy changes to help strengthen the VA Home Loan Program. MBA1558appreciates the responsibility of serving as a leading voice for our1559veteran homeowners - and the lenders who work to provide affordable1560mortgage credit to them.1561 MBA has also enjoyed a strong relationship with our partners at the1562VA Loan Guaranty Service. The VA Home Loan Program is (by design) among1563the most affordable and accessible mortgage programs given its unique1564``no downpayment'' feature and limited upfront closing costs. These1565benefits have driven significant program growth in recent years with1566rapidly expanding loan volume for those who qualify for this1567benefit.\2\1568---------------------------------------------------------------------------1569 \2\ The number of active loans within VA's guaranty program has1570increased from 1.5 million loans in 2012 to nearly 4 million loans in15712025, as noted in the related August 2025 press release here and1572January 2012 press release here. VA accounted for approximately 111573percent of total originations, according to 2024 HMDA data (Data as of1574June 26th, 2025. Visit www.ffiec.gov/hmda for details on data1575exemptions and disclosures).1576---------------------------------------------------------------------------1577 In my statement today, I will emphasize the need for several1578programmatic improvements designed to support VA's core mission of1579promoting sustainable homeownership for veterans, along with ensuring1580its capacity is able to meet rising demand. MBA looks forward to1581working with this Subcommittee, the full Committee, and the VA to1582achieve these goals and help modernize the Home Loan program.15831584Options to Improve Program Elements and Lower Costs for Veteran1585Families15861587Partial Claim Implementation15881589 For many veterans, the most affordable home is the one where they1590currently reside. In March of this year, VA published two draft1591policies to update its loss mitigation ``waterfall'' and implement its1592partial claim program. MBA applauds the VA's use of the so-called1593``drafting table'' approach to solicit stakeholder feedback on these1594two important policy changes that will help provide more options for1595distressed VA borrowers to stay in their homes.1596 Together, those two policy changes will provide VA borrowers1597experiencing financial hardships with more options to retain their1598homes under a range of interest rate environments. However, aspects of1599this draft waterfall can still be improved. For example, a borrower1600should not have to agree to a monthly payment increase before receiving1601other home retention options that do not result in a payment increase.1602It is also important for the policy to explicitly allow servicers the1603option to offer regular forbearance, so a veteran homeowner does not1604have to commit to a repayment option before his/her hardship has1605ended.\3\1606---------------------------------------------------------------------------1607 \3\ Regular forbearance generally involves short-term agreements1608designed to pause payments to provide temporary relief for unexpected1609expenses or hardships (e.g., job loss), without commitment to a1610specific path for repayment. Under a special forbearance, the borrower1611and servicer agree to temporarily pause payments, but the borrower must1612commit ahead of time to either pay the full amount owed in one lump sum1613or use a repayment plan. This commitment can be difficult if a borrower1614does not know how long the hardship will last, such as the case of a1615borrower who lost their job and does not know when they will find new1616employment.1617---------------------------------------------------------------------------1618 Servicers understand the importance of getting these changes1619implemented as soon as possible. They know there are borrowers who1620could be helped by partial claims today, and that is why our1621association pushed so aggressively for the legislation granting VA1622authority to administer partial claims to be enacted as soon as1623possible.\4\ MBA applauds both the majority and minority Members of the1624Committee - and your staffs - on your work with the MBA and its VA Home1625Loan Program working group members on this important issue for our1626Nation's heroes.1627---------------------------------------------------------------------------1628 \4\ Public Law 119-31, or H.R. 1815, the VA Home Loan Program1629Reform Act of 20251630---------------------------------------------------------------------------1631 While MBA and its members want the needed policies finalized1632quickly, there are critical changes the VA should make to those draft1633policies to make them more effective.\5\ We must balance a sense of1634urgency against the importance of allowing enough time to ensure a1635smooth rollout and prevent situations where borrowers might receive1636confusing communications about the timing and content of the options1637available to them. MBA looks forward to continuing to work with the VA1638to ensure that veterans are offered the best possible options to retain1639their homes.1640---------------------------------------------------------------------------1641 \5\ See MBA Comments: VA Draft of Partial Claim and Loss Mitigation1642Waterfall Changes here.16431644---------------------------------------------------------------------------1645Funding Fee Offsets16461647 MBA has consistently advocated for preserving the use of the VA1648funding fee to pay for home loan guaranty benefits only. Consequently,1649MBA's concerns regarding the funding offsets within H.R. 6047, the1650Sharri Briley and Eric Edmundson Veterans Benefits Expansion Act of16512025, are consistent with our association's traditional position1652regarding the VA funding fee.1653 Indeed, as far back as 1982, MBA expressed concerns regarding the1654``proposed one-half percentage point `user-fee' for VA-guaranteed1655loans...[as] this fee could impose an additional financial burden upon1656veterans who wish to become homeowners at a time when record high1657interest rates already make this goal a difficult one.''1658 MBA further opined at the time ``that if Congress chooses to impose1659a [funding] fee...these funds should be paid directly to the VA and1660targeted for use by the VA in the administration of the program...[as]1661MBA is most concerned that there will be no effort to match the user-1662fee paid by the veterans to the service provided and the expenses1663incurred under the VA home loan guaranty program.'' \6\1664---------------------------------------------------------------------------1665 \6\ U.S. Congress, House Committee on Veterans' Affairs,1666Subcommittee on Housing and Memorial Affairs, VA Home Loan Guaranty1667Program, hearing, 97th Cong., 2d sess., March 23, 1982, p. 1081668---------------------------------------------------------------------------1669 Our veterans today--just as in the early 1980's--face one of the1670most challenging housing affordability environments in decades, marked1671by elevated interest rates, limited inventory (in many markets), and1672rising home prices. Increasing mandatory fees on VA loans would1673disproportionately harm veteran households with modest incomes - many1674of whom rely on the VA program precisely because it offers lower1675upfront costs and no down payment requirement.1676 Therefore, MBA fully supports the intent of the amendment in the1677nature of a substitute (ANS) to H.R. 6047 - to provide improved1678disability and dependency benefits for veterans and their survivors.1679However, the bill effectively funds those worthy benefit expansions by1680burdening other veteran homebuyers through higher mortgage fees.1681Homeownership is a foundational component of long-term financial1682stability - and it should not continue to be treated as a primary1683source of revenue to enable policy changes outside of the Home Loan1684program.1685 As indicated prior to the markup of the legislation, MBA1686respectfully asks that this Subcommittee (and the full Committee) work1687to revise Section 3 to remove or substantially modify the proposed fee1688increases and extensions. MBA thanks the bipartisan leadership of the1689entire Committee for the open and collaborative dialog on this1690legislation to date - and would welcome the opportunity to continue1691working on solutions that preserve affordable access to the Home Loan1692Program.16931694Appropriations/VA Staffing/ Technology16951696 Technology modernization and adequate staffing resources are1697essential to the timely development and implementation of policies that1698directly benefit veterans. Currently, limited staffing creates1699bottlenecks that slow the rollout of important policy updates,1700guidance, and program enhancements. While VA has demonstrated a strong1701willingness to engage with stakeholders and advance meaningful reforms,1702resource constraints can delay execution and limit the agency's ability1703to respond quickly to evolving market conditions. Providing sufficient1704staffing support would help ensure that key initiatives, such as1705updates to loss mitigation tools, appraisal policies, and origination1706frameworks, are implemented efficiently and consistently.1707 At the same time, investment in modernization of the VA's existing1708IT systems is equally important. As the mortgage industry continues to1709evolve, the VA must be equipped with modern systems that can support1710updated policies, streamline processes, and improve communication with1711lenders and servicers. Without adequate technology investments, even1712well-designed policy changes can face operational challenges in1713execution. Enhancing the VA's technology infrastructure would help the1714agency keep pace with industry standards, reduce manual processes, and1715support more effective program delivery.1716 MBA encourages this authorizing Subcommittee - and full Committee -1717to work with appropriators to support the necessary funding for the VA1718Home Loan Program to modernize its technology platform and deploy1719sufficient staff to meet the demands of its growing portfolio and the1720veterans the agency serves.17211722Appraisal Standard Reforms - Minimum Property Requirements17231724 We also encourage the VA to implement several reforms designed to1725improve the program's competitiveness in a way that reflects today's1726housing market and practices. A notable example is the agency's1727appraisal standards. In 2023, the VA published an Advance Notice of1728Proposed Rulemaking on Minimum Property Requirements (MPR) in1729accordance with Public Law 117-308,\7\ which directed VA to consider1730updates to its appraisal and property standards framework.1731---------------------------------------------------------------------------1732 \7\ H.R. 7735--Improving Access to the VA Home Loan Benefit Act of173320221734---------------------------------------------------------------------------1735 MBA urges the VA to publish program guidance that aligns its1736property condition framework with the housing Government-Sponsored1737Enterprises (Fannie Mae and Freddie Mac) by replacing the current MPR1738structure with the Uniform Appraisal Dataset property condition1739ratings.1740 Under this approach, appraisers would evaluate properties using the1741standardized scale (C1 through C6), with clear expectations tied to1742each rating.\8\ This structure would preserve appropriate safety-and-1743soundness safeguards while creating a clearer, more consistent, and1744operationally practical standard for lenders, appraisers, and1745borrowers.1746---------------------------------------------------------------------------1747 \8\ Minimum Property Requirements for VA-Guaranteed and Direct1748Loans (Docket: 2023-27068)1749---------------------------------------------------------------------------1750 To be more descriptive, updating the framework improves housing1751affordability and VA Home Loan Program competitiveness by reducing1752unnecessary repair conditions that can delay closings, increase costs,1753and discourage sellers from accepting VA offers. It also expands the1754pool of available appraisers by eliminating the need to navigate a1755separate, highly specialized VA property-standard framework, thereby1756increasing consistency and efficiency in the appraisal process. Both1757considerations will prove to be crucial should interest rates decrease.1758 MBA looks forward to the opportunity to partner with the VA on a1759potential draft policy that updates its MPR guidance and collaborate1760with our real estate industry partners to improve VA's appraisal1761standards as market dynamics change.17621763VA Proposed Revision to IRRRLs17641765 MBA also encourages the VA to implement targeted reforms to the1766Interest Rate Reduction Refinance Loan (IRRRL) program to improve its1767effectiveness and ensure it reflects today's mortgage market and1768operational realities, particularly with respect to recoupment1769calculations, net tangible benefit standards, seasoning requirements,1770and comparison disclosure processes. As the VA continues to implement1771statutory changes under the Economic Growth, Regulatory Relief, and1772Consumer Protection Act and the Protecting Affordable Mortgages for1773Veterans Act, it is important that program requirements align with how1774lenders originate and refinance loans in practice.1775 MBA urges the VA to take the next step and refine its policies to1776provide greater clarity, consistency, and operational flexibility.\9\1777This includes aligning recoupment calculations to avoid borrower1778confusion, providing flexibility where a clear borrower benefit exists,1779and addressing requirements that rely on data lenders often cannot1780reasonably access, such as certain loan-level details needed for1781seasoning and disclosure calculations. These improvements would better1782align program requirements with real-world lending practices while1783maintaining appropriate consumer protections.1784---------------------------------------------------------------------------1785 \9\ Loan Guaranty: Revisions to VA-Guaranteed or Insured Interest1786Rate Reduction Refinancing Loans1787---------------------------------------------------------------------------1788 Modernizing these elements of the IRRRL framework will improve1789affordability and access for veterans by preserving the program's1790streamlined nature, reducing compliance uncertainty, and minimizing1791unnecessary operational burdens that can limit lender participation.1792Ensuring the program remains efficient and accessible will be1793especially important as interest rates change and more veterans look to1794refinance into more sustainable loan terms.17951796Additional Policy Suggestions17971798 While updating the MPR framework is a critical step, it should be1799part of a broader effort to modernize the VA Home Loan program. Several1800additional policies by which actions from the VA can meaningfully1801improve affordability, streamline operations, and enhance the Home Loan1802Program's competitiveness in today's market are highlighted below:18031804 The VA should update its allowable fees servicers can1805charge to process assumable loans. Assumable loans create a unique1806opportunity for both veteran homeowners looking to sell their homes1807with a lower interest rate and those veteran home buyers who seek to1808obtain a home with a lower monthly payment. However, fees to process an1809assumption have only been nominally increased over the last three1810decades, resulting in lenders now losing money when they process an1811assumption because of the amount of meticulous underwriting needed to1812facilitate them. MBA encourages the VA to increase the amount of these1813allowable fees to facilitate more of these assumable loans - and1814encourage both the Congress and the agency to explore ways to cover the1815higher down payment needed to purchase a home with an assumable1816loan.\10\1817---------------------------------------------------------------------------1818 \10\ See MBA's Request for Increase of the Allowable Fee for1819Assumptions advocating for VA (and FHA) to increase their assumption1820fee up to $3,500 per assumption and set the allowable fee to be indexed1821periodically to inflation.18221823 The VA should update its fee documentation requirements1824to better align with how third-party services are billed and1825documented. Current expectations around borrower-level invoices do not1826reflect common industry practices, in which many vendors issue1827aggregated or bulk invoices. This creates operational challenges and1828inconsistent audit outcomes. Providing clear guidance on acceptable1829alternative documentation, like the approach adopted by FHA, reduces1830uncertainty, limits unnecessary post-closing findings and refunds, and1831also improves consistency across lenders and reviewers.\11\1832---------------------------------------------------------------------------1833 \11\ VA Invoice and Fee Itemization Requirement18341835 As a general matter, the VA should update its Lenders1836Handbook to incorporate and consolidate the numerous outstanding1837circulars issued in recent years, which have created a fragmented and1838sometimes inconsistent policy framework. Relying on standalone1839circulars makes it difficult for lenders and servicers to identify1840current requirements, increasing the risk of misinterpretation,1841compliance challenges, and inconsistent loan reviews. A comprehensive1842update would improve clarity, promote uniform application of VA1843policies, and reduce operational uncertainty across the industry.1844Ultimately, a modernized and fully integrated Handbook would enhance1845program efficiency, strengthen oversight, and better support lenders1846---------------------------------------------------------------------------1847serving veteran borrowers.18481849Conclusion18501851 Once again, MBA appreciates this opportunity to comment on the many1852complex components of the important VA Home Loan Program benefit1853offered to our Nation's heroes. Our association and its members look1854forward to working with this Subcommittee, the full Committee, the VA,1855and the full administration to serve as a resource while these1856important discussions continue.1857 I look forward to answering any questions you may have.18581859 Prepared Statement of Kurt Thompson18601861Introduction18621863 Chairman Van Orden, Ranking Member Pappas, and distinguished1864Members of the Subcommittee, my name is Kurt Thompson. I am the Broker/1865Owner of RE/MAX Liberty in Westminster, Massachusetts, where I have1866been helping buyers and sellers for over 29 years. I am a Certified1867Residential Specialist, a past President of the Massachusetts1868Association of REALTORS, and the 2012 Massachusetts REALTOR of the1869Year. I am also a veteran. I served my country for 8 years, in the Army1870Reserve and later with the 157th Air Refueling Wing at Pease Air1871National Guard Base in New Hampshire. I am proud of that service, and I1872am proud to say that the VA home loan program helped me achieve1873homeownership. That experience gave me a personal appreciation for what1874this benefit means, and it is part of why I work hard to make sure my1875veteran clients know about the program and can access it.1876 Today I am testifying on behalf of more than 1.4 million members of1877the National Association of REALTORS (NAR), representing every zip1878code in the United States, who thank you for the opportunity to present1879NAR's views on improving and modernizing the VA Home Loan Guaranty1880program. NAR is America's largest trade association, and our members1881engage in all aspects of the residential and commercial real estate1882industries, with agents and brokers in every congressional district in1883the country.1884 NAR members work with veteran and active-duty homebuyers in every1885corner of this country, and we go above and beyond to serve them well.1886For example, NAR offers the Military Relocation Professional1887certification, which trains REALTORS to understand the unique needs of1888current and former servicemembers and their families, guide them1889through the relocation process, help them make informed decisions about1890whether to rent or purchase a home, and explain the basics of VA1891financing. For a veteran coming home after years of deployment or1892active service, the housing market they return to can look completely1893different from the one they left. Having a knowledgeable REALTOR in1894their corner can make the difference between getting into a home and1895losing the property. Someone who understands the VA loan program, knows1896how to structure an offer competitively, and can connect them with a1897lender who knows the program inside and out--that is what veteran1898buyers need. That is the standard of service NAR members strive to1899provide, and it is why we care so deeply about making sure the VA1900program itself works as well as it should.1901 Part of my standard practice when working with any buyer is to ask1902whether they have VA eligibility, because if they do, that benefit is1903almost always their best financing option. The no-down-payment feature1904alone can be the difference between homeownership and continued renting1905for a veteran who is living paycheck to paycheck. When it works well,1906the VA loan program does not just put a veteran in a home, it helps1907them stabilize their housing costs and build multigenerational wealth.1908Helping a veteran reach that milestone is one of the most meaningful1909things I do in this job.1910 The VA home loan program has the potential to be even stronger than1911it is today, and this Subcommittee has the opportunity to make that1912happen. That is what I am here to discuss.19131914VA Home Loan Reform Act (H.R. 1815)19151916 Before turning to opportunities for improving veteran access to1917sustainable homeownership, NAR wants to express sincere gratitude to1918this Subcommittee for its leadership on one of the most important1919veterans housing reforms in recent memory: the passage of the VA Home1920Loan Reform Act (H.R. 1815).1921 For years, veterans using VA-guaranteed home loans were the only1922homebuyers in America explicitly prohibited from directly compensating1923their real estate agent. As market practices shifted following the NAR1924settlement and sellers have become less willing to cover buyer agent1925fees, this put veterans in an increasingly difficult position: use1926their hard-earned VA benefit and risk going without professional1927representation or forgo the benefit altogether to level the playing1928field with other buyers.1929 NAR worked with both this Subcommittee and the Department of1930Veterans Affairs to address this. The VA took the first step by1931temporarily suspending the prohibition in 2024, providing immediate1932relief. But veterans needed a permanent solution, and H.R. 18151933delivered that. Passed unanimously and signed into law, the Act1934requires the VA to develop a lasting strategy to ensure veterans are1935not disadvantaged when seeking real estate representation. It also1936establishes a new partial claims program to help veterans who are1937struggling to keep up with their mortgage payments, ensuring the1938program supports veterans long after the closing table. NAR has been1939engaged with VA on implementation and looks forward to continuing that1940work as the agency develops its permanent solution. We thank this1941Subcommittee for its leadership in getting H.R. 1815 across the finish1942line.19431944The Broader Context: America's Housing Affordability Crisis19451946 To understand the value of the VA program, it helps to first look1947at the housing market veterans are entering. Even the strongest loan1948benefit can only do so much when available homes are in such short1949supply.1950 America faces a shortage of approximately 4.7 million homes. There1951were more homes available in 1995 than there are today, despite 751952million more Americans. Fourteen years of severe underbuilding1953following the Great Recession left a massive shortfall that we're still1954nowhere close to closing. The scarcity of affordable home inventory1955significantly blocks homeownership, and this issue disproportionately1956impacts first-time homebuyers. Many of my first-time homebuyers have1957effectively paused their home search due to affordability issues.1958First-time buyers now represent just 21 percent of all purchases, down1959from a historical norm of around 40 percent. The typical first-time1960buyer today is 40 years old, waiting more than a decade longer than1961their parents did to buy a home. A 10-year delay in buying means losing1962more than $150,000 in potential equity growth.1963 For veterans, this hits especially hard. The VA loan program's1964greatest strength, enabling veterans to purchase homes with no down1965payment, matters most when there are affordable homes to buy. When1966inventory is scarce and prices are elevated, even the best financing1967can only do so much.1968 Solving this requires action on multiple fronts. In the short term,1969we need to unlock existing inventory. One of the biggest barriers is1970outdated Federal tax policy. The capital gains exclusion for home sales1971has not been updated in 27 years, and homeowners who have seen1972significant appreciation are effectively penalized for selling, which1973keeps homes off the market. NAR supports updating this exclusion1974through legislation like the More Homes on the Market Act (H.R. 1340)1975as one meaningful step to free up inventory. Improving VA loan1976assumability, which I will address shortly, is another tool that could1977help veteran buyers access existing inventory at mortgage rates lower1978than what is currently available.1979 In the longer term, we need to build more homes, particularly the1980smaller, more affordable starter homes that first-time buyers need. In1981my market in Massachusetts, most entry-level buyers are looking in the1982$300,000 to $500,000 range. Getting more homes built at that price1983point would make a real difference for veterans and first-time buyers1984alike, and there is legislation before Congress right now that would1985help do exactly that.1986 The Senate recently passed the 21st Century Road to Housing Act1987(H.R. 6644), and NAR encourages the House to consider the bill and work1988toward its timely passage. The bill confronts barriers to housing at1989all levels of government--giving communities new tools and resources to1990plan and build for growth, streamlining Federal processes that delay1991construction, modernizing Federal housing programs to meet the needs of1992today, and improving financing options for manufactured and rural1993housing. Critically for this hearing, it also takes steps to improve1994access to credit for homebuyers and ensures veterans can take full1995advantage of their VA home loan benefits.1996 Veterans deserve a housing market with enough supply to make1997homeownership genuinely attainable, and this bill is an important step1998toward that goal. NAR remains deeply engaged on housing supply and1999affordability issues across Congress and will continue working with2000lawmakers to advance new ideas and solutions that make homeownership2001more attainable for all Americans, including those who have served our2002country.2003 The improvements to the VA program I will outline today are2004meaningful and necessary. Still, the program can only reach its full2005potential when paired with a broader effort to expand affordable2006housing opportunities for veterans. Strengthening the benefit and2007increasing supply are complementary goals, and both are essential.20082009Appraisals and Minimum Property Requirements: Where Veterans Lose Deals20102011 When it comes to the VA program itself, I want to spend most of my2012time on appraisals, because this is where I see the problem most2013clearly in my day-to-day work.2014 The biggest competitive challenge I see for VA buyers is closing2015costs leading to appraisal risk. Many of my veteran buyers have limited2016cash on hand, and other than the VA funding fee, closing costs cannot2017be rolled into a VA loan. This means I often need to negotiate seller2018concessions to reduce their out-of-pocket expenses at closing. In hot2019real estate markets like my own, many sellers are not willing to simply2020reduce their asking price to cover those costs. They want to net what2021they were expecting. So, to get the seller their number and secure the2022concession my client needs, the offer price has to go above asking. The2023appraisal then has to come in at that higher number, which may be2024higher than market value. If it does not, the home seller has to either2025take less than they wanted or walk away. When that seller has another2026offer on the table without that complication, they have to ask2027themselves whether it is worth the risk. That is where veterans lose2028properties.2029 That said, I have seen sellers accept VA offers over cash offers at2030the same price because they wanted to do right by a veteran. Those2031moments are genuinely moving, and they are a reminder of how much this2032country values the people who serve it. But I cannot count on that2033happening in every transaction.2034 Another issue that can arise is that VA appraisers are required to2035flag property conditions that other loan programs would simply pass2036over. When that happens, the seller may be asked to make repairs before2037the loan can close, adding time and cost to the transaction and giving2038sellers yet another reason to favor a conventional offer. In some2039cases, the only path forward is to order a second appraisal, which2040means more time and more money out of pocket for a buyer who often does2041not have a lot of either. NAR recommends that Congress direct the VA to2042bring its Minimum Property Requirements in line with the standards used2043by Fannie Mae and Freddie Mac. Greater alignment would reduce those2044misconceptions and make VA-financed offers more competitive. It would2045also expand the pool of appraisers willing to work within the program2046and reduce friction throughout the transaction, all while maintaining2047the protections that veterans using the program deserve.2048 Appraisal wait times are also a problem, and they are made worse by2049a shortage of VA appraisers, particularly in rural markets. In2050competitive markets, long delays can kill deals. Buyers lose rate2051locks, sellers get frustrated and move on, and the veteran is back to2052square one. NAR recommends that this Subcommittee examine how the2053appraisal process can be modernized to reduce wait times without2054sacrificing the quality and independence that protect both the borrower2055and the program, including 21st Century ROAD to Housing Act's call to2056widen the pool of appraisers allowed to perform appraisals for the VA.2057Ensuring that appraisers are compensated appropriately--for instance,2058indexing fees with inflation, allowing for surge fees, and expanding2059mileage reimbursement--could also grow the pool of appraisers in high-2060demand and rural areas. Any changes should be deliberate and evidence-2061based, but there is real opportunity here to do better for veterans.2062More broadly, NAR encourages Congress to ensure that VA has the2063staffing, technology, and resources necessary to administer the home2064loan program effectively and serve veterans in a timely manner.20652066Loan Assumptions: A Benefit That Has Yet to Deliver on Its Promise20672068 VA loans are assumable, which in today's high interest rate2069environment sounds like an incredible feature. A buyer who takes on a2070seller's 2.5 or 3 percent mortgage instead of taking out a new loan at2071today's rates would save significantly on their monthly payment. I have2072had consumers ask me about this. Some of my veteran clients know their2073loan is assumable and want to know if it is a marketing advantage when2074they sell.2075 My honest answer is that I cannot think of a single transaction in2076my career where an assumption has actually closed. The process takes2077too long, sometimes 90 days or more, and most buyers cannot bridge the2078gap between the existing loan balance and the purchase price without a2079substantial cash down payment. For buyers who have that kind of money,2080a conventional loan is often just as easy. The assumption benefit2081exists on paper, but in practice it rarely pencils out.2082 I think there is real potential here that is going untapped, and2083NAR would welcome the Subcommittee's interest in finding ways to make2084assumptions more workable. Streamlining the process and shortening2085timelines would be a start. Part of the reason assumptions rarely get2086done is that lenders are not adequately compensated for facilitating2087them, so they have little incentive to prioritize the process. NAR2088recommends that the VA reevaluate its caps on lender compensation for2089facilitating mortgage assumptions. There are also ideas worth exploring2090around financing solutions that could help buyers close the equity gap,2091so that assumptions are not limited to the rare buyer who can cover the2092difference in cash. Congress should also address the fact that veterans2093currently lose their VA entitlement when their loan is assumed by a2094non-veteran, which can leave them without a benefit they earned through2095their service.20962097Conclusion20982099 The VA Home Loan Guaranty program has been one of the most2100important benefits our Nation offers to those who serve for over 802101years, and I am proud to have benefited from it personally. When it2102works well, it is a powerful path to homeownership and the kind of2103wealth-building that can last generations. I have seen that in my own2104life, and I have seen it in the lives of the veterans I have had the2105privilege of working with over nearly three decades in this business.2106This program deserves to be the best it can be, and NAR stands ready to2107work with this Subcommittee and the Department of Veterans Affairs to2108make that happen.2109 Thank you for the opportunity to testify. I welcome your questions.21102111 Prepared Statement of Alys Cohen21122113 Chairman Van Orden, Ranking Member Pappas, and Members of the2114Subcommittee, thank you for the opportunity to testify on behalf of the2115low-income clients of the National Consumer Law Center (NCLC) \1\2116regarding the VA Home Loan Guaranty Program.2117---------------------------------------------------------------------------2118 \1\ Since 1969, the nonprofit National Consumer Law Center (NCLC)2119has worked for consumer justice and economic security for low-income2120and other disadvantaged people in the U.S. through its expertise in2121policy analysis and advocacy, publications, litigation, expert witness2122services, and training.2123---------------------------------------------------------------------------2124 We support the goal of promoting affordability for Veteran2125homeowners, and we recognize the key role the VA Home Loan Program2126plays in providing housing stability for the Veterans who have earned2127their home loan benefit through service and sacrifice. Throughout the2128country, Veterans and their families are struggling to keep up with2129increasing housing costs both for owning or renting a home.2130 The most important step the VA can take to promote affordability2131for Veterans is to help them avoid unnecessary and devastating home2132loss when they face financial hardships, including those hardships2133related to their service. To accomplish this, the Department of2134Veterans Affairs (VA) should ensure that systems are in place to help2135Veterans retain their homes when feasible. These ``home retention''2136programs keep kids in school, stabilize neighborhoods, prevent home2137equity loss, and allow Veterans to avoid an unforgiving rental market2138that in many parts of the country does not provide affordable2139alternatives to people who lose their homes. Research shows that2140helping borrowers facing financial hardship cure their delinquent2141payments and reduce monthly payments when necessary helps avoid2142defaulting again and saves the taxpayers tens of thousands of dollars2143in foreclosure-related claims.\2\2144---------------------------------------------------------------------------2145 \2\ See Home Retention Programs Save the GSEs and FHA Billions by2146Avoiding the High Cost of Preventable Dispositions (Housing Policy2147Council July 2025).2148---------------------------------------------------------------------------2149 There is significant work for the VA in this area because the2150mortgage relief options available for Veteran borrowers remain less2151favorable than the options available to other borrowers with federally2152backed mortgages. As a result, a higher share of VA seriously2153delinquent loans are moving to active foreclosure compared to Fannie2154Mae and Freddie Mac (GSE) and Federal Housing Administration (FHA)2155loans. As of the end of 2025, about 35 percent of seriously delinquent2156VA loans were in active foreclosure, compared to 30 percent for the2157GSEs and 25 percent for FHA.\3\2158---------------------------------------------------------------------------2159 \3\ See ICE Mortgage Monitor (Dec. 2025) at 6.2160---------------------------------------------------------------------------2161 It is a bedrock principle of Federal housing policy that borrowers2162who are facing financial hardship should have access to workout options2163to bring their loans current and avoid foreclosure where possible. Home2164retention policies provide stability for homeowners by giving them a2165path to recovery after financial hardships. These policies do not2166guarantee that all borrowers who fall behind can avoid foreclosure, but2167they help prevent avoidable losses. They also help Federal investors,2168like the VA, avoid losses from unnecessary foreclosures, which supports2169the health of the program and reduces the cost to taxpayers. According2170to a recent analysis, the average home disposition ``results in a loss2171to the guarantor of about $72,000,'' and well-designed loss mitigation2172options significantly reduce those losses.\4\2173---------------------------------------------------------------------------2174 \4\ See Home Retention Programs Save the GSEs and FHA Billions by2175Avoiding the High Cost of Preventable Dispositions (Housing Policy2176Council July 2025).2177---------------------------------------------------------------------------2178 Research on loan modification performance provides compelling2179evidence that catching up arrearages while keeping payments the same2180for borrowers who faced temporary hardship, and providing targeted2181payment relief for borrowers whose hardships were permanent, are the2182most cost-effective means for providing assistance that reduces2183redefault rates. Unsurprisingly, options that increase the monthly2184payment make loss mitigation less effective for both groups and lead to2185significantly more redefaults and foreclosures.\5\2186---------------------------------------------------------------------------2187 \5\ See Quantifying the Savings from FHA's Home Retention Programs2188(Housing Policy Council Sept. 2025).2189---------------------------------------------------------------------------2190 Following the below discussion of needed changes to VA's home2191retention program, we address the fact that VA has limited ability to2192affect the broader supply and affordability issues in the national2193housing market. VA borrowers operate within the broader national2194housing landscape and changes to the VA program would have limited2195impact. Moreover, VA's origination rules have yielded better loan2196performance than FHA's and changes should be considered with that in2197mind and with an eye toward continued fair lending compliance.21982199 1. The new VA mortgage relief options should prioritize2200 affordability.22012202 The situation for delinquent VA borrowers should improve due to the2203passage of the VA Home Loan Program Reform Act (H.R. 1815), and we2204thank members of this Committee for your leadership on that2205legislation. However, the new ``Partial Claim'' program authorized in2206the legislation has not been implemented yet and VA's draft handbook2207proposals do not fulfill the promise of the legislation, especially2208with respect to affordability.2209 According to the VA draft waterfall plan, after mortgage servicers2210consider repayment plans (which allow for relatively quick repayment of2211the delinquent amounts in addition to making the regular monthly2212payments), they must then move to an evaluation of permanent loan2213modification options.\6\ It is reasonable for VA to consider loan2214modifications early in the process because, in some situations,2215modifications may provide payment relief to borrowers while also2216avoiding the use of Partial Claim funds, which are limited under the2217statute.2218---------------------------------------------------------------------------2219 \6\ See Draft VA Manual M26-4 Chapter 5 Loss Mitigation at Steps 4-22208 (posted March 4, 2026).2221---------------------------------------------------------------------------2222 Yet, in the list of permanent modification options, before a2223borrower can access a payment-stabilizing Partial Claim VA's proposal2224requires a homeowner to accept up to a 15 percent increase in their2225monthly payment as part of a 30-year loan modification, despite the2226fact that they are very likely delinquent because they have experienced2227a financial hardship.\7\ Of the roughly 90,000 VA borrowers who are2228seriously delinquent on their loan today, we estimate that over 30,0002229will face a payment increase if the program proceeds as drafted.\8\ VA2230has other options that create more affordable payments - a 40-year2231modification and the payment-stabilizing Partial Claim - but these2232options are not offered until later in the draft waterfall. As a2233consequence, the draft proposal makes less-than-effective use of the2234Partial Claim, which keeps monthly payments at the pre-hardship level2235by placing the past due amount at the end of the loan term so the2236borrower can resume their regular monthly payments.2237---------------------------------------------------------------------------2238 \7\ See id. at Step 6. Before the 30-year Modification, the2239servicer will consider the Traditional Modification, and the borrower2240will only receive it if it reduces the payment and they are otherwise2241eligible. If it increases the payment, the servicer will move to the224230-year modification, which, unlike the Traditional Modification, is2243automatically offered as long as it doesn't increase the borrower's2244monthly payment by more than 15 percent. We proposed eliminating the2245Traditional Modification in our comments because it introduces2246complexity and is not necessary.2247 \8\ Estimates based on Ginnie Mae Loan Performance Data provided by2248Recursion and ICE McDash, and analyzed by Center for Responsible2249Lending. Note that such analysis is based on calculations from2250privately available data because VA does not publish loan performance2251data as FHA does.2252---------------------------------------------------------------------------2253 We sincerely appreciate the fact that VA placed its proposed2254waterfall on the drafting table for comment by stakeholders. We are2255hopeful that VA will make changes as a result of the consistent2256feedback it received to change the order of its waterfall to prioritize2257affordability by offering solutions that increase the borrower's2258monthly payment only as a last resort. However, if the waterfall2259proceeds without change, it would add a significant financial burden on2260Veteran borrowers who have already experienced financial hardships and2261are behind on their mortgage as a result. For example, the 30,0002262seriously delinquent VA borrowers who would get a payment-increasing226330-year modification under VA's proposed program would see their2264monthly payment rise by an average of $150 per month (9 percent), which2265is $1,800 per year.\9\ Many if not most of these borrowers who are2266trying to regain their financial footing are unlikely to find the2267higher payment affordable.2268---------------------------------------------------------------------------2269 \9\ Estimates based on Ginnie Mae Loan Performance Data provided by2270Recursion and analyzed by Center for Responsible Lending.2271---------------------------------------------------------------------------2272 The waterfall, if unchanged, also would unnecessarily raise costs2273for the taxpayer because payment-increasing modifications are much more2274likely to lead to foreclosure than payment-stabilizing or payment-2275decreasing modifications. The VA's proposed ordering of hardship2276assistance solutions, while understandably seeking to be sensitive to2277the effect of term extensions and total amounts due, is out of step2278with Fannie Mae, Freddie Mac, and FHA, which only consider payment2279increases as a last resort, if at all. To truly promote affordability,2280VA should ensure that Veteran borrowers have options that promote2281affordability first, which will save money for the VA Loan Guaranty2282Fund, Veteran borrowers, and mortgage servicers. In sum, a borrower's2283monthly payment is the most important aspect of maintaining an2284affordable mortgage, so loss mitigation should be designed to reduce or2285keep payments level when possible.2286 Thus, VA should direct servicers to implement modifications instead2287of Partial Claims early in the evaluation process or ``waterfall'' only2288where the modification results in an equal or lower payment. If the 30-2289year modification does not achieve this result, VA should direct the2290servicer to try the 40-year modification. If even this modification2291does not result in a level payment, then the servicer should evaluate2292the borrower for a Partial Claim, which restores the borrower's pre--2293hardship payment by moving the arrears to the end of the loan without2294modifying its terms. Based on the research described above, a Partial2295Claim is significantly more likely to be successful than the payment-2296increase modification. Another reason to avoid modifications that2297result in a payment increase is the irreversibility of that action-once2298the loan's payment is increased through a payment-increase2299modification, a subsequent Partial Claim will only maintain that higher2300payment and cannot bring the homeowner back to their original payment.23012302 2. VA should provide a current alternative to foreclosure for2303 those who can make payments and are waiting for the new home2304 retention options.23052306 One change is urgently needed. We urge the VA to adopt measures to2307hold off foreclosures until the Partial Claim program becomes widely2308available. We have suggested full pay forbearance as one reasonable2309means of relief. Under a full pay forbearance plan, the servicer would2310agree to start accepting monthly payments again for Veterans who have2311financially recovered and can resume making their monthly payments. The2312servicer would then agree to hold off on foreclosure. This would work2313well for Veterans who would qualify for a Partial Claim once the2314program is released. It would prevent the past due amounts from2315growing, get the borrower back in the habit of making payments, and2316reduce the amount of Partial Claim VA would ultimately have to pay. In2317addition, servicers would no longer be required to fund advances of2318delinquent principal and interest to Ginnie Mae or tax and insurance2319payments. Both the VA Loan Guaranty Fund and mortgage servicers would2320be spared the cost of claims related to unnecessary losses.23212322 3. VA should make additional changes to the loss mitigation2323 program.23242325 a. Make standard forbearance available.23262327 Further, we suggest that VA follow industry standards (including2328for most other government-backed mortgage programs such as the GSEs and2329FHA) and offer borrowers the opportunity to request forbearance, which2330provides a temporary pause on payments when there is a hardship.2331Borrowers should be specifically permitted to request, during each2332default, a forbearance of monthly payments up to a maximum of 12 months2333of delinquency. VA's draft waterfall, which does not allow for2334servicers to offer forbearance before evaluating for home disposition2335options, does not take into account that hardships may take time to2336resolve.\10\ Importantly, borrowers are encouraged to call their2337servicers early, but if they do so when they lose their job, they are2338going to be directed to home disposition options, even though the2339hardship may be temporary and the person may be eligible for loss2340mitigation in a few months, avoiding a loss to the VA program as well.2341---------------------------------------------------------------------------2342 \10\ See Draft VA Manual M26-4 Chapter 5 Loss Mitigation at Step23432(b) (posted March 4, 2026).2344---------------------------------------------------------------------------2345 Research shows that reperformance rates are much better when2346borrowers contact their servicer early and stay in constant2347communication with their servicer rather than delaying contact and2348trying to deal with it themselves financially.\11\ Without this2349addition of forbearance, VA borrowers will have substantially worse2350loss mitigation options compared to GSE and FHA borrowers.2351---------------------------------------------------------------------------2352 \11\ See Alexei Alexandrov, Laurie Goodman & Ted Tozer, Urban2353Institute, Normalizing Forbearance (July 2022).23542355 b. Explicitly direct servicers to establish payment2356---------------------------------------------------------------------------2357 plans when the Partial Claim becomes due.23582359 When the Partial Claim becomes due at the end of the borrower's2360loan, a balloon payment will be triggered. The VA should include in its2361handbook material addressing its expectations ``when the guaranteed2362loan matures'' and a balloon payment is required for borrowers who pay2363until maturity.\12\ We recommend that VA add an expectation that2364servicers establish a reasonable payment plan for borrowers unable to2365repay the Partial Claim balloon payment in a lump sum on loan maturity.2366It would be tragic for borrowers to lose their homes due to an2367inability to repay the Partial Claim balloon payment all at once, when2368they faithfully repaid their VA-guaranteed mortgage for decades.2369---------------------------------------------------------------------------2370 \12\ See Draft VA Manual M26-4 Chapter 22 Loss Mitigation at 22.042371(posted March 4, 2026).23722373---------------------------------------------------------------------------2374 4. Finalize the positive aspects of the current proposal.23752376 We appreciate that VA has taken steps to implement the Partial2377Claim program, and its use of the drafting table and its willingness to2378accept comments. VA's proposal included a number of positive2379developments that should be included in the final handbook language,2380including streamlining loss mitigation and not charging interest on the2381Partial Claim. We urge VA to also take additional steps to make their2382Partial Claim and loan modification programs more affordable for2383Veterans and effective for the VA Loan Guaranty Fund.23842385 5. While some changes to VA lending programs can be made, they2386 should preserve VA loan performance and are unlikely to serve2387 as a major cure for the affordability crisis.23882389 Aside from adjustments to its home retention program, the other2390steps VA could take, including those associated with origination costs,2391will only help around the edges at best or would seek to address issues2392that are not within VA's control. The problems of housing supply and2393overall market affordability are problems for all homebuyers and2394mortgage borrowers. For example, the particular issue of institutional2395investors using their significant financial advantages to purchase2396single family homes harms all families, including Veterans, who rely on2397mortgages and cannot compete with investor resources. The current2398Administration has recognized that this is a market-wide problem, and2399Veterans share the housing market with other borrowers. Addressing2400these dynamics is outside of VA's control and requires a whole-market2401set of solutions.2402 With respect to VA's appraisal and Minimum Property Standards,2403these perform important functions of ensuring the soundness of the2404homes Veterans purchase and catching faulty appraisals. We participated2405in VA's public comment process in 2024 discussing how to improve the2406appraisal and minimum property standards.\13\ We have urged VA, in any2407revision to its appraisal standards, to implement controls against2408appraiser bias consistent with fair lending laws.2409---------------------------------------------------------------------------2410 \13\ See Comments to the VA Regarding Loan Guaranty: Minimum2411Property Requirements for VA-Guaranteed and Direct Loans (Feb. 2024).2412---------------------------------------------------------------------------2413 Regarding the VA loan origination process, any steps the agency2414takes to alter its underwriting should take into account that VA loans2415perform very well, and the agency should avoid changes that could2416undermine this loan performance or would unnecessarily narrow access to2417the program. In particular, it is worth noting that VA's unique2418underwriting guidelines, with a focus on the borrower's residual2419income, have led to an impressive track record of performance. Because2420the agency has enjoyed significant success with its underwriting2421process, and better loan performance than FHA,\14\ the agency should be2422cautious of changes to its underwriting process. Moreover, any2423reductions in closing costs will be limited and cannot have a2424significant impact on market-wide affordability issues.2425---------------------------------------------------------------------------2426 \14\ See Ginnie Mae, Report on VA Liquidity at 12-13 (Nov. 10,24272022); Congressional Budget Office, The Role of the Department of2428Veterans Affairs in the Single-Family Mortgage Market (Sept. 2021);2429Laurie Goodman, Ellen Seidman & Jun Zhu, Urban Institute, VA Loans2430Outperform FHA Loans. Why? And What Can We Learn? (July 2014).24312432---------------------------------------------------------------------------2433 6. VA should do a small-dollar mortgage pilot.24342435 One constructive step the VA should explore is a small-dollar2436mortgage loan pilot in coordination with FHA. There is not sufficient2437mortgage financing available for borrowers who are seeking to buy2438relatively less expensive homes. There is a particular dearth of2439lending for mortgages with balances under $150,000. This lack of2440lending limits the ability of people with modest incomes to buy modest-2441priced houses and instead pushes them into a challenging rental market.2442 Some have blamed the Federal Truth in Lending Act (TILA) rules that2443were developed in the aftermath of the financial crisis, and that test2444for high-cost mortgages and limit how loan originators are paid, as2445causes for the lack of small dollar mortgage lending. As indicated in2446our issue brief, Myths and Facts About Ways to Increase Small-Dollar2447Mortgage Lending,\15\ that is simply not the case. Because the2448thresholds for rules adjust depending on the size of the loan, they are2449sufficiently flexible to accommodate small mortgages and the CFPB2450already has the ability to do an evidence-based adjustment as needed.2451---------------------------------------------------------------------------2452 \15\ See Myths and Facts About Ways to Increase Small Dollar2453Mortgage Lending, National Consumer Law Center (Aug. 2024).2454---------------------------------------------------------------------------2455 However, we do recognize that economic forces are limiting the2456availability of small dollar credit, and this directly impacts2457affordability. In order to better understand the state of this market2458and explore solutions, VA, along with FHA, should engage in a pilot2459program to better understand how to improve the situation. This pilot2460could include exploring different approaches to compensating loan2461originators, including salaries and minimum payments (even where a loan2462may be small enough to otherwise yield a smaller payment).24632464 7. Conclusion24652466 We appreciate VA's efforts to date to stand up the Partial Claim2467program, and urge VA leadership to focus squarely on the task before2468them - rolling out an affordable Partial Claim and loss mitigation2469waterfall. The agency should take steps to improve home retention2470programs in a manner that protects the VA Loan Guaranty Fund,2471eliminates unnecessary burdens on loan servicers, and ultimately2472stabilizes homeownership for Veterans who earned the home loan benefit2473through service and sacrifice.2474 Thank you for the opportunity to testify. We look forward to2475working with you and the VA to shape systems that will improve2476affordability for Veteran borrowers.24772478 Statements for the Record24792480 ----------24812482 Prepared Statement of Auction.com24832484[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]24852486 Prepared Statement of National Association of Mortgage Brokers24872488 NAMB and the mortgage professionals we represent are proud to serve2489America's veterans, and we fully support the Committee's commitment to2490expanding benefits for disabled veterans and Gold Star families. We2491submit this statement to offer a constructive path forward that2492achieves the goals of H.R. 6047 without imposing new financial burdens2493on the very veterans this legislation seeks to honor.2494 As currently drafted, H.R. 6047 funds expanded benefits through VA2495loan funding fees--a mechanism that would affect an estimated 1.882496million disabled veterans with ratings below 70 percent, representing a2497potential financial impact of approximately $24.3 billion. NAMB urges2498the Committee to consider an alternative approach that delivers equal2499or greater benefit at no new Federal cost.2500 Specifically, NAMB recommends amending H.R. 6047 to allow eligible2501surviving spouses to continue receiving the deceased veteran's 1002502percent service-connected disability compensation rate in lieu of the2503reduced Dependency and Indemnity Compensation (DIC) structure. Because2504this compensation has already been authorized and appropriated by2505Congress prior to the veteran's death, this solution would meaningfully2506increase support for surviving families--effectively doubling the2507proposed $10,000 annual increase--while preserving VA Home Loan2508benefits and incurring no net increase in Federal expenditure. NAMB2509welcomes the opportunity to work with the Committee to refine this2510approach and stands ready to provide additional data in support of this2511recommendation.25122513 [all]Documents
The committee filed 10 documents for the meeting.