September 10, 2025

On July 30, 2025, President Donald J. Trump signed H.R. 1815, the VA Home Loan Reform Act (the “Act”), into law, marking the most significant modernization of the U.S.  loan program in years. The Act aims to align the Department of Veteran Affairs (“VA”) lending loss mitigation options with those available under the Federal Housing Administration (“FHA”) and the U.S. Department of Agriculture (USDA). Two reforms stand out: (1) veterans may now compensate real estate agents directly and (2) the VA established a partial claim program. The changes reflect ongoing efforts to level the playing field for veterans competing in today’s housing market and to strengthen foreclosure protections in the event of financial hardship. This legislation provides veterans with both enhanced negotiating power during home purchases and a critical safety net when repayment challenges arise.

Allowing veterans to pay real estate agents directly eliminates a persistent barrier, addressing sellers’ reluctance to accept VA-backed offers caused by uncertainty over how commissions would be covered. That uncertainty stemmed from VA rules that historically barred veterans from compensating agents. This left sellers questioning whether their own listing agent would receive full payment. Meanwhile, the partial claim program allows veterans, who fall behind on payments, to defer up to 25–30% of their loan balance; this reduces monthly obligations while preserving homeownership. According to the Urban Institute, almost 90,000 VA loans are delinquent with 33,000 in foreclosure as of last month. With this new bill, the VA can now offer foreclosure-prevention options for delinquent borrowers that are like options offered by the FHA.

Together, these reforms close gaps in the VA system exposed back during the pandemic when veterans faced elevated delinquency and foreclosure risks. Industry experts caution, however, that uncertainty remains over how servicers will implement the partial claim framework and how quickly relief will reach borrowers. The concern is heightened by the Act’s relatively short relief window for partial claims as the program is scheduled to expire in 2027. Furthermore, lenders may find the partial claim’s reduced guaranty less palatable. As the housing market cools, these policy shifts could mark a turning point by giving veterans stronger negotiating power in purchases and a more reliable path to sustain homeownership.