April 13, 2021

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VA Announces Changes to Verification of Income Process | Weiner Brodsky Kider PC

The VA announced improvements to their COE (Certificate of Eligibility) for the VA Home Loan Guarantee Program, which will result in the elimination of most cases where lenders and VA use VA Form 26-8937 (VA Benefits Review) Use to check the receipt of a veteran’s income from VA. Rather, effective March 19, 2021, the VA will allow lenders to rely on the information provided by borrowers in the COE.

VA form 26-8937 Veterans receiving VA disability benefits must certify that they have debts related to those benefits. The veteran must fill out the top half of the form, and the lender will then send it to the VA Regional Loan Center. There the form is processed and the lower half is filled out and sent back to the lender. The completed form must be kept as part of the lender’s lending package.

in the Circular 26-21-03The VA announced a new streamlined process that eliminates the need to submit Form 26-8937, as long as the COE lists the income or debt information that the lender wants to review. Lenders should only use Form 26-8937 in specific cases when the lender requires additional information from the VA. If VA Form 26-8937 is still required, lenders should upload it to WebLGY. Circular 26-21-03 contains three examples of cases where Form 26-8937 may still be required. These include: 1) an active duty service with a proposed rating or disability claim pending; 2) a condition by the COE that specifically states that Form 26-8937 must be submitted; or 3) other unresolved anomalies related to the Entitlement Certificate that could not be resolved by calling the VA. The VA has also directed lenders to rely on a Veteran’s Reward Letter in cases where the veteran’s income increases after completing the COE.

The VA believes these changes will improve and streamline the income verification process, and provide lenders with more confidence as to whether to charge a funding fee from veterans who are judged to be eligible as a result of a pre-release disability assessment or assessment based upon a pre-discharge review of existing medical evidence that results in the issuance of a memorandum rating. After March 19, 2021, the VA will no longer process or review Form 26-8937 submissions unless one of the exceptions listed above is met.