HR 2791 — Homes for Heroes Act

changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italics, and existing law in which no 
change is proposed is shown in roman):

 TITLE 38, UNITED STATES CODE

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 PART III--READJUSTMENT AND RELATED BENEFITS

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 CHAPTER 37--HOUSING AND SMALL BUSINESS LOANS

 SUBCHAPTER I--GENERAL

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Sec. 3703. Basic provisions relating to loan guaranty and insurance

 (a)(1)(A) Any loan to a veteran eligible for benefits under 
this chapter, if made for any of the purposes specified in 
section 3710 of this title and in compliance with the 
provisions of this chapter, is automatically guaranteed by the 
United States in an amount not to exceed the lesser of--
 (i)(I) in the case of any loan of not more than 
 $45,000, 50 percent of the loan;
 (II) in the case of any loan of more than $45,000, 
 but not more than $56,250, $22,500;
 (III) except as provided in subclause (IV) of this 
 clause, in the case of any loan of more than $56,250, 
 the lesser of $36,000 or 40 percent of the loan; or
 (IV) in the case of any loan of more than $144,000 
 for a purpose specified in clause (1), (2), (3), (5), 
 (6), or (8) of section 3710(a) of this title, 25 
 percent of the loan; or
 (ii) the maximum amount of guaranty entitlement 
 available to the veteran as specified in subparagraph 
 (B) or (C).
 (B) With respect to loans described in subclauses (I), (II), 
or (III) of subparagraph (A)(i), the maximum amount of guaranty 
entitlement available to a veteran for purposes specified in 
section 3710 of this title shall be $36,000, reduced by the 
amount of entitlement previously used by the veteran under this 
chapter and not restored as a result of the exclusion in 
section 3702(b) of this title.
 (C)(i) With respect to loans described in subclause (IV) of 
subparagraph (A)(i) made to a veteran not covered by clause 
(ii), the maximum amount of guaranty entitlement available to 
the veteran shall be 25 percent of the loan.
 (ii) With respect to loans described in subclause (IV) of 
subparagraph (A)(i) made to a covered veteran, the maximum 
amount of guaranty entitlement available to the veteran shall 
be [25 percent of the Freddie Mac conforming loan limit] 37.5 
percent of the Freddie Mac conforming loan limit , reduced by 
the amount of entitlement previously used by the veteran under 
this chapter and not restored as a result of the exclusion in 
section 3702(b) of this title.
 (iii) In this subparagraph:
 (I) The term ``covered veteran'' means a veteran who 
 has previously used entitlement under this chapter and 
 for whom the full amount of entitlement so used has not 
 been restored as a result of the exclusion in section 
 3702(b) of this title.
 (II) The term ``Freddie Mac conforming loan limit'' 
 means the limit determined under section 305(a)(2) of 
 the Federal Home Loan Mortgage Corporation Act (12 
 U.S.C. 1454(a)(2)) for a single-family residence, as 
 adjusted for the year involved.
 (2)(A) Any housing loan which might be guaranteed under the 
provisions of this chapter, when made or purchased by any 
financial institution subject to examination and supervision by 
any agency of the United States or of any State may, in lieu of 
such guaranty, be insured by the Secretary under an agreement 
whereby the Secretary will reimburse any such institution for 
losses incurred on such loan up to 15 per centum of the 
aggregate of loans so made or purchased by it.
 (B) Loans insured under this section shall be made on such 
other terms, conditions, and restrictions as the Secretary may 
prescribe within the limitations set forth in this chapter.
 (b) The liability of the United States under any guaranty, 
within the limitations of this chapter, shall decrease or 
increase pro rata with any decrease or increase of the amount 
of the unpaid portion of the obligation.
 (c)(1) Loans guaranteed or insured under this chapter shall 
be payable upon such terms and conditions as may be agreed upon 
by the parties thereto, subject to the provisions of this 
chapter and regulations of the Secretary issued pursuant to 
this chapter, and shall bear interest not in excess of such 
rate as the Secretary may from time to time find the loan 
market demands, except that in establishing the rate of 
interest that shall be applicable to such loans, the Secretary 
shall consult with the Secretary of Housing and Urban 
Development regarding the rate of interest applicable to home 
loans insured under section 203(b) of the National Housing Act 
(12 U.S.C. 1709(b)). In establishing rates of interest under 
this paragraph for one or more of the purposes described in 
clauses (4) and (7) of section 3710(a) of this title, the 
Secretary may establish a rate or rates higher than the rate 
specified for other purposes under such section, but any such 
rate may not exceed such rate as the Secretary may from time to 
time find the loan market demands for loans for such purposes.
 (2) The provisions of the Servicemen's Readjustment Act of 
1944 which were in effect before April 1, 1958, with respect to 
the interest chargeable on loans made or guaranteed under such 
Act shall, notwithstanding the provisions of paragraph (1) of 
this subsection, continue to be applicable--
 (A) to any loan made or guaranteed before April 1, 
 1958; and
 (B) to any loan with respect to which a commitment to 
 guarantee was entered into by the Secretary before 
 April 1, 1958.
 (3) This section shall not be construed to prohibit a veteran 
from paying to a lender any reasonable discount required by 
such lender, when the proceeds from the loan are to be used--
 (A) to refinance indebtedness pursuant to clause (5), 
 (8), or (9)(B)(i) of section 3710(a) of this title or 
 section 3712(a)(1)(F) of this title;
 (B) to repair, alter, or improve a farm residence or 
 other dwelling pursuant to clauses (4) and (7) of 
 section 3710(a) of this title;
 (C) to construct a dwelling or farm residence on land 
 already owned or to be acquired by the veteran except 
 where the land is directly or indirectly acquired from 
 a builder or developer who has contracted to construct 
 such dwelling for the veteran;
 (D) to purchase a dwelling from a class of sellers 
 which the Secretary determines are legally precluded 
 under all circumstances from paying such a discount if 
 the best interest of the veteran would be so served; or
 (E) to refinance indebtedness and purchase a 
 manufactured-home lot pursuant to section 
 3710(a)(9)(B)(ii) or 3712(a)(1)(G) of this title, but 
 only with respect to that portion of the loan used to 
 refinance such indebtedness.
 (4)(A) In guaranteeing or insuring loans under this chapter, 
the Secretary may elect whether to require that such loans bear 
interest at a rate that is--
 (i) agreed upon by the veteran and the mortgagee; or
 (ii) established under paragraph (1).
The Secretary may, from time to time, change the election under 
this subparagraph.
 (B) Any veteran, under a loan described in subparagraph 
(A)(i), may pay reasonable discount points in connection with 
the loan. Except in the case of a loan for the purpose 
specified in section 3710(a)(8), 3710(b)(7), or 3712(a)(1)(F) 
of this title, discount points may not be financed as part of 
the principal amount of a loan guaranteed or insured under this 
chapter.
 (C) Not later than 10 days after an election under 
subparagraph (A), the Secretary shall transmit to the 
Committees on Veterans' Affairs of the Senate and House of 
Representatives a notification of the election, together with 
an explanation of the reasons therefor.
 (d)(1) The maturity of any housing loan at the time of 
origination shall not be more than thirty years and thirty-two 
days.
 (2)(A) Any loan for a term of more than five years shall be 
amortized in accordance with established procedure.
 (B) The Secretary may guarantee loans with provisions for 
various rates of amortization corresponding to anticipated 
variations in family income. With respect to any loan 
guaranteed under this subparagraph--
 (i) the initial principal amount of the loan may not 
 exceed the reasonable value of the property as of the 
 time the loan is made; and
 (ii) the principal amount of the loan thereafter 
 (including the amount of all interest to be deferred 
 and added to principal) may not at any time be 
 scheduled to exceed the projected value of the 
 property.
 (C) For the purposes of subparagraph (B) of this paragraph, 
the projected value of the property shall be calculated by the 
Secretary by increasing the reasonable value of the property as 
of the time the loan is made at a rate not in excess of 2.5 
percent per year, but in no event may the projected value of 
the property for the purposes of such subparagraph exceed 115 
percent of such reasonable value. A loan made for a purpose 
other than the acquisition of a single-family dwelling unit may 
not be guaranteed under such subparagraph.
 (3)(A) Any real estate housing loan (other than for repairs, 
alterations, or improvements) shall be secured by a first lien 
on the realty. In determining whether a loan is so secured, the 
Secretary may either disregard or allow for subordination to a 
superior lien created by a duly recorded covenant running with 
the realty in favor of either of the following:
 (i) A public entity that has provided or will provide 
 assistance in response to a major disaster as 
 determined by the President under the Robert T. 
 Stafford Disaster Relief and Emergency Assistance Act 
 (42 U.S.C. 5121 et seq.).
 (ii) A private entity to secure an obligation to such 
 entity for the homeowner's share of the costs of the 
 management, operation, or maintenance of property, 
 services, or programs within and for the benefit of the 
 development or community in which the veteran's realty 
 is located, if the Secretary determines that the 
 interests of the veteran borrower and of the Government 
 will not be prejudiced by the operation of such 
 covenant.
 (B) With respect to any superior lien described in 
subparagraph (A) created after June 6, 1969, the Secretary's 
determination under clause (ii) of such subparagraph shall have 
been made prior to the recordation of the covenant.
 (e)(1) Except as provided in paragraph (2) of this 
subsection, an individual who pays a fee under section 3729 of 
this title, or who is exempted under section 3729(c) of this 
title from paying such fee, with respect to a housing loan 
guaranteed or insured under this chapter that is closed after 
December 31, 1989, shall have no liability to the Secretary 
with respect to the loan for any loss resulting from any 
default of such individual except in the case of fraud, 
misrepresentation, or bad faith by such individual in obtaining 
the loan or in connection with the loan default.
 (2) The exemption from liability provided by paragraph (1) of 
this subsection shall not apply to--
 (A) an individual from whom a fee is collected (or 
 who is exempted from such fee) under section 
 3729(b)(2)(I) of this title; or
 (B) a loan made for any purpose specified in section 
 3712 of this title.
 (f) The application for or obtaining of a loan made, insured, 
or guaranteed under this chapter shall not be subject to 
reporting requirements applicable to requests for, or receipts 
of, Federal contracts, grants, loans, loan guarantees, loan 
insurance, or cooperative agreements except to the extent that 
such requirements are provided for in, or by the Secretary 
pursuant to, this title.

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Sec. 3729. Loan fee

 (a) Requirement of Fee.--(1) Except as provided in subsection 
(c), a fee shall be collected from each person obtaining a 
housing loan guaranteed, insured, or made under this chapter, 
and each person assuming a loan to which section 3714 of this 
title applies. No such loan may be guaranteed, insured, made, 
or assumed until the fee payable under this section has been 
remitted to the Secretary.
 (2) The fee may be included in the loan and paid from the 
proceeds thereof.
 (b) Determination of Fee.--(1) The amount of the fee shall be 
determined from the loan fee table in paragraph (2). The fee is 
expressed as a percentage of the total amount of the loan 
guaranteed, insured, or made, or, in the case of a loan 
assumption, the unpaid principal balance of the loan on the 
date of the transfer of the property.
 (2) The loan fee table referred to in paragraph (1) is as 
follows:

 
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 Type of loan Active duty veteran Reservist Other obligor
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(A)(i) Initial loan described in 2.15 2.40 NA
 section 3710(a) to purchase or
 construct a dwelling with 0-down, or
 any other initial loan described in
 section 3710(a) other than with 5-
 down or 10-down (closed on or after
 October 1, 2004, and before January
 1, 2020).
(A)(ii) Initial loan described in 2.30 2.30 NA
 section 3710(a) to purchase or
 construct a dwelling with 0-down, or
 any other initial loan described in
 section 3710(a) other than with 5-
 down or 10-down (closed on or after
 January 1, 2020, and before April 7,
 2023).
(A)(iii) Initial loan described in 2.15 2.15 NA
 section 3710(a) to purchase or
 construct a dwelling with 0-down, or
 any other initial loan described in
 section 3710(a) other than with 5-
 down or 10-down (closed on or after
 April 7, 2023, and before June 9,
 2034).
(A)(iv) Initial loan described in 1.40 1.40 NA
 section 3710(a) to purchase or
 construct a dwelling with 0-down, or
 any other initial loan described in
 section 3710(a) other than with 5-
 down or 10-down (closed on or after
 June 9, 2034).
(B)(i) Subsequent loan described in 3.30 3.30 NA
 section 3710(a) to purchase or
 construct a dwelling with 0-down, or
 any other subsequent loan described
 in section 3710(a) (closed on or
 after October 1, 2004, and before
 January 1, 2020).
(B)(ii) Subsequent loan described in 3.60 3.60 NA
 section 3710(a) to purchase or
 construct a dwelling with 0-down, or
 any other subsequent loan described
 in section 3710(a) (closed on or
 after January 1, 2020, and before
 April 7, 2023).
(B)(iii) Subsequent loan described in 3.30 3.30 NA
 section 3710(a) to purchase or
 construct a dwelling with 0-down, or
 any other subsequent loan described
 in section 3710(a) (closed on or
 after April 7, 2023, and before June
 9, 2034).
(B)(iv) Subsequent loan described in 1.25 1.25 NA
 section 3710(a) to purchase or
 construct a dwelling with 0-down, or
 any other subsequent loan described
 in section 3710(a) (closed on or
 after June 9, 2034).
(C)(i) Loan described in section 1.50 1.75 NA
 3710(a) to purchase or construct a
 dwelling with 5-down (closed before
 January 1, 2020).
(C)(ii) Loan described in section 1.65 1.65 NA
 3710(a) to purchase or construct a
 dwelling with 5-down (closed on or
 after January 1, 2020, and before
 April 7, 2023).
(C)(iii) Loan described in section 1.50 1.50 NA
 3710(a) to purchase or construct a
 dwelling with 5-down (closed on or
 after April 7, 2023, and before June
 9, 2034).
(C)(iv) Loan described in section 0.75 0.75 NA
 3710(a) to purchase or construct a
 dwelling with 5-down (closed on or
 after June 9, 2034).
(D)(i) Loan described in section 1.25 1.50 NA
 3710(a) to purchase or construct a
 dwelling with 10-down (closed before
 January 1, 2020).
(D)(ii) Loan described in section 1.40 1.40 NA
 3710(a) to purchase or construct a
 dwelling with 10-down (closed on or
 after January 1, 2020, and before
 April 7, 2023).
(D)(iii) Loan described in section 1.25 1.25 NA
 3710(a) to purchase or construct a
 dwelling with 10-down (closed on or
 after April 7, 2023, and before June
 9, 2034).
(D)(iv) Loan described in section 0.50 0.50 NA
 3710(a) to purchase or construct a
 dwelling with 10-down (closed on or
 after June 9, 2034).
[(E) Interest rate reduction 0.50] 0.50] NA]
 refinancing loan].
(E)(i) Interest rate reduction 0.50 0.50 0.50
 refinancing loan (closed on or after
 August 1, 2025, and before December
 31, 2025).
(E)(ii) Interest rate reduction 0.25 0.25 0.25
 refinancing loan (closed on or after
 December 31, 2025, and before
 December 31, 2027) 0.250.25.
(E)(iii) Interest rate reduction 0.50 0.50 0.50
 refinancing loan (closed on or after
 December 31, 2027, and before
 October 1, 2031).
(E)(iv) Interest rate reduction 0.75 0.75 0.75
 refinancing loan (closed on or after
 October 1, 2031, and before December
 31, 2035) .
(E)(v) Interest rate reduction 0.50 0.50 0.50
 refinancing loan (closed on or after
 December 31, 2035) .
(F) Direct loan under section 3711... 1.00 1.00 NA
(G) Manufactured home loan under 1.00 1.00 NA
 section 3712 (other than an interest
 rate reduction refinancing loan).
(H) Loan to Native American veteran 1.25 1.25 NA
 under section 3762 (other than an
 interest rate reduction refinancing
 loan).
(I) Loan assumption under section 0.50 0.50 0.50
 3714.
(J) Loan under section 3733(a)....... 2.25 2.25 2.25.
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 (3) Any reference to a section in the ``Type of loan'' column 
in the loan fee table in paragraph (2) refers to a section of 
this title.
 (4) For the purposes of paragraph (2):
 (A) The term ``active duty veteran'' means any 
 veteran eligible for the benefits of this chapter other 
 than a Reservist.
 (B) The term ``Reservist'' means a veteran described 
 in section 3701(b)(5)(A) of this title who is eligible 
 under section 3702(a)(2)(E) of this title.
 (C) The term ``other obligor'' means a person who is 
 not a veteran, as defined in section 101 of this title 
 or other provision of this chapter.
 (D)(i) The term ``initial loan'' means a loan to a 
 veteran guaranteed under section 3710 or made under 
 section 3711 of this title if the veteran has never 
 obtained a loan guaranteed under section 3710 or made 
 under section 3711 of this title.
 (ii) If a veteran has obtained a loan guaranteed 
 under section 3710 or made under section 3711 of this 
 title and the dwelling securing such loan was 
 substantially damaged or destroyed by a major disaster 
 declared by the President under section 401 of the 
 Robert T. Stafford Disaster Relief and Emergency 
 Assistance Act (42 U.S.C. 5170), the Secretary shall 
 treat as an initial loan, as defined in clause (i), the 
 next loan the Secretary guarantees or makes to such 
 veteran under section 3710 or 3711, respectively, if--
 (I) such loan is guaranteed or made before 
 the date that is three years after the date on 
 which the dwelling was substantially damaged or 
 destroyed; and
 (II) such loan is only for repairs or 
 construction of the dwelling, as determined by 
 the Secretary.
 (E) The term ``subsequent loan'' means a loan to a 
 veteran, other than an interest rate reduction 
 refinancing loan, guaranteed under section 3710 or made 
 under section 3711 of this title that is not an initial 
 loan.
 (F) The term ``interest rate reduction refinancing 
 loan'' means a loan described in section 3710(a)(8), 
 3710(a)(9)(B)(i), 3710(a)(11), 3712(a)(1)(F), or 
 3762(h) of this title.
 (G) The term ``0-down'' means a downpayment, if any, 
 of less than 5 percent of the total purchase price or 
 construction cost of the dwelling.
 (H) The term ``5-down'' means a downpayment of at 
 least 5 percent or more, but less than 10 percent, of 
 the total purchase price or construction cost of the 
 dwelling.
 (I) The term ``10-down'' means a downpayment of 10 
 percent or more of the total purchase price or 
 construction cost of the dwelling.
 (c) Waiver of Fee.--(1) A fee may not be collected under this 
section from a veteran who is receiving compensation (or who, 
but for the receipt of retirement pay or active service pay, 
would be entitled to receive compensation), from a surviving 
spouse of any veteran (including a person who died in the 
active military, naval, air, or space service) who died from a 
service-connected disability, or from a member of the Armed 
Forces who is serving on active duty and who provides, on or 
before the date of loan closing, evidence of having been 
awarded the Purple Heart.
 (2)(A) A veteran described in subparagraph (B) shall be 
treated as receiving compensation for purposes of this 
subsection as of the date of the rating described in such 
subparagraph without regard to whether an effective date of the 
award of compensation is established as of that date.
 (B) A veteran described in this subparagraph is a veteran who 
is rated eligible to receive compensation--
 (i) as the result of a pre-discharge disability 
 examination and rating; or
 (ii) based on a pre-discharge review of existing 
 medical evidence (including service medical and 
 treatment records) that results in the issuance of a 
 memorandum rating.

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