HR-3694-119
Referred to the House Committee on Financial Services.
Sponsored by Brittany Pettersen (D-CO)
What it does
This bill would make two changes to federal mortgage disclosure requirements. First, it would require that the Informed Consumer Choice Disclosure — a document already given to prospective FHA borrowers — also include a cost comparison with VA home loans, assuming prevailing interest rates. Second, it would direct the Federal Housing Finance Agency (FHFA) to add a military service question to the Uniform Residential Loan Application (commonly called the "1003" form) within six months of enactment, positioned above the signature line. Lenders would not be required to determine whether a borrower actually qualifies for a VA loan.
Who benefits
Active-duty military members, veterans, and surviving spouses who may be eligible for VA loans but are unaware of that option when applying for an FHA loan. Veterans who would have qualified for a VA loan — which typically requires no down payment and no private mortgage insurance — but unknowingly chose a more expensive FHA loan. Housing counselors and consumer advocates who would have a standardized data point to identify eligible borrowers. Mortgage lenders who specialize in VA loans, who may gain referrals from newly informed borrowers.
Who is hurt
FHA lenders and mortgage servicers who may lose business if eligible veterans shift to VA loans. The Department of Veterans Affairs, which would face increased administrative demand if more borrowers pursue VA loan eligibility determinations. Lenders who would bear compliance costs to update disclosure forms and loan application systems within the six-month rulemaking window. Borrowers who are not veterans would see no direct benefit from the new disclosures.
Supporters argue
Supporters argue that veterans frequently take out FHA loans without knowing they may qualify for VA loans, which generally offer lower interest rates, no down payment, and no private mortgage insurance requirement — potentially saving eligible borrowers tens of thousands of dollars over the life of a loan. They contend that a simple, low-cost disclosure requirement and a checkbox on an existing form are minimally burdensome ways to close an information gap that disproportionately costs those who have served in the military.
Opponents argue
Opponents argue that adding a VA loan comparison to FHA disclosures may create confusion, since lenders are explicitly not required to verify eligibility — meaning borrowers could receive information about a loan product they cannot actually obtain. They contend that the six-month rulemaking deadline for FHFA is administratively tight and may produce a rushed rule, and that the military service question on the loan application, while voluntary in nature, raises questions about how that data will be used or whether it could inadvertently affect underwriting decisions.
Constitutional context
No significant constitutional issues are raised by this bill. Congress has broad authority under the Commerce Clause (Art. I, §8, cl. 3) to regulate mortgage lending and disclosure requirements, which form the basis of the Fair Housing Act and the National Housing Act. The bill modifies existing federal disclosure frameworks rather than creating new regulatory structures.
Checks and balances
The executive branch (FHFA Director) gains narrow rulemaking authority to implement the military service question; Congress retains oversight through the Financial Services Committee, and the six-month statutory deadline constrains agency discretion.
Historical precedent
The Informed Consumer Choice Disclosure was established under the National Housing Act to help FHA borrowers compare loan options; this bill extends that existing framework rather than creating a new one.