S. 1921 — Veterans Housing Stability Act of 2025

This section establishes a Partial Claim Program under which the Secretary of Veterans Affairs may purchase a portion of the unpaid principal balance (up to 25% generally) of a defaulted or imminently defaulting loan guaranteed under the VA home loan program (i.e., subchapter III of 38 U.S.C. chapter 37), with the veteran borrower repaying that amount interest-free at loan maturity. (Thus, the Secretary obtains a subordinate lien on the property or an agreement from the lender to remit repayments, and payments are applied first to arrearages including taxes and insurance; no program expenses may be charged to the borrower, and claims cannot be advances on the loan guaranty.) The section further specifies that: (1) the cap increases to 30% of unpaid principal balance for borrowers delinquent as of enactment of the Veterans Housing Stability Act of 2025 or in response to a presidentially declared major disaster; (2) lenders receiving payments must service claims as the Secretary's agent if required, establish the claim, and receive appropriate compensation; (3) upon borrower default on the partial claim, the veteran remains liable for resulting losses and has reduced future loan guaranty entitlement; (4) foreclosure of the Secretary's lien follows state or local law; and (5) all program decisions are at the Secretary's sole discretion, final, and non-reviewable.