VA Friyay: 🏡 VA Home Loan Reform Act Signed Into Law: What You Need to Know

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Before we dive into today’s important update, let’s start with a quick dad joke (you know I’ve got to!)

Why do bees have sticky hair? Because they use a honeycomb. 🐝😄 Pew pew!

Alright—now let’s get into the serious stuff. On July 30th, 2025, the VA Home Loan Reform Act was officially signed into law. This is a big deal for VA borrowers who are struggling with mortgage payments or facing the risk of foreclosure.

Here’s a breakdown of what the new law includes and how it could help your clients:

🛑 1. Foreclosure Prevention Tools

This is one of the biggest components of the Act. The VA is now authorized to step in and help prevent foreclosures on VA-backed loans.

How It Works:

• If a VA loan goes into foreclosure, the VA can pay the lender enough to bring the loan current.

• In return, the VA will place a lien on the property to protect their investment.

• This means instead of losing their home (and their VA entitlement), borrowers may have a second chance—either to keep the home or sell it without going through foreclosure.

Why It Matters:

• Avoiding foreclosure helps preserve the borrower’s entitlement benefits, which are otherwise reduced or lost if the home forecloses.

• This creates a lifeline for veterans in financial distress.

💰 2. Permanent Partial Claim Program

Another new option introduced is the Permanent Partial Claim, designed for borrowers who have missed several mortgage payments.

Here’s an Example:

Let’s say a borrower has missed 6 months of payments, totaling $15,000. Under the new law:

• The VA can cover up to 25% of the unpaid principal balance.

• That amount becomes a second lien on the property, interest-free.

• It must be repaid within 5 years or when the home is sold/refinanced, whichever comes first.

This is very similar to down payment assistance programs where repayment is deferred, except in this case, it's meant to help those who are delinquent on their mortgage.

🏘️ 3. Increased Support for Homeless Veterans

The Act also boosts funding for the Grant and Per Diem Program, increasing allocations from $258 million to $344 million for FY 2025–2026.

This will support transitional housing for veterans—especially those affected by toxic exposures—helping ensure our heroes have a safe place to call home during difficult times.

📉 4. Lower Net Spending, Long-Term Impact

Interestingly, the Congressional Budget Office (CBO) estimates that this new law will decrease net direct spending by $147 million over the next 10 years.

That’s a rare win-win: more support for veterans and reduced long-term government spending.

🏦 5. Why More VA Loans = More Protection

Here’s a key insight: the more VA loans we originate, the more the VA earns through the funding fee, and the stronger its case for more congressional budget support.

More VA loans = more resources for foreclosure prevention, delinquency support, and veteran aid programs.

So, if you’re in the industry—this is one more reason to advocate for and specialize in VA loans.

👀 What’s Next? Buyer Agent Commission Still Unsettled

One thing to note—this new Act does not address the buyer agent commission issue. That topic is still tied to a temporary VA variance, and depends on local MLS structures.

NAR has stated it’s working on a more permanent solution, but as of now—it’s not yet law. So stay tuned for future updates.

🎯 Final Thoughts

The VA Home Loan Reform Act is a powerful new tool—especially for helping veterans who are:

• Behind on their mortgage payments

• At risk of foreclosure

• Needing transitional housing or financial relief

As VA loan professionals, this gives us more ways to serve our veteran clients when they need us most.

The more we understand this Act, the better equipped we’ll be to guide our clients toward stability and homeownership success—even when things get tough.

That’s all for now.

Nuke out. 💥