New VALID Act Requires FHA Lenders to Disclose VA Loan Options and Adds Military Service Question to Mortgage Applications

The newly proposed VA Loan Informed Disclosure Act of 2025—the VALID Act for short—is all about making sure military service members and veterans don’t miss out on potential benefits when they’re shopping for a mortgage. Essentially, this bill targets two major federal housing players: the Federal Housing Administration (FHA) and the entities that back most standard mortgages, Fannie Mae and Freddie Mac.

The FHA Disclosure Upgrade: Don’t Miss the Fine Print

Section 2 of the VALID Act aims to close a potential information gap at the FHA. Right now, when you apply for an FHA-backed mortgage, you get a required disclosure form about your loan options. This bill mandates that the FHA must now include specific information about VA loans on that disclosure form, right after the section discussing the loan-to-value ratio. Specifically, the disclosure must mention what happens when someone assumes an existing FHA loan that is backed by the VA, including the prevailing interest rates at the time of assumption. For a veteran currently looking at an FHA loan, this addition acts like a flashing sign reminding them to check into their VA benefits, which often offer better terms than FHA loans.

It’s important to note the fine print here: The bill explicitly clarifies that the original FHA lender is not required to check if a potential borrower actually qualifies for a VA loan. The lender's job is just to include the information on the form. While this is helpful for clarifying liability, it means the onus is still on the veteran to follow up. The lender is simply providing the map, not driving the car.

The Military Service Question: Data Collection Gets Serious

Section 3 tackles the standard mortgage application form used by Fannie Mae and Freddie Mac—the Uniform Residential Loan Application. The Director of the Federal Housing Finance Agency (FHFA) is mandated to ensure that the enterprises add a new, mandatory question: Have you served in the military? This isn't just buried in a stack of papers; the bill requires this question to be placed prominently, right above the applicant's signature line. The FHFA has six months to make this change happen.

Why does this matter? For the applicant, it's a final check before signing on the dotted line, ensuring they’ve considered all options tied to their military service. For the housing finance system, this change is a big deal for data collection. By standardizing the collection of veteran status right at the start of the process, it gives Fannie and Freddie better data on who is applying for mortgages and who might be eligible for VA benefits. This could lead to better outreach and policy targeting down the line. For the average person buying a home, this means the system is getting smarter about recognizing military service and the benefits that come with it.