VA Lenders Handbook M26-7
Chapter 4: Credit Underwriting
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Topic 2: Income – Required Documentation and Analysis, continued
m. Verification and Analysis of Income of Recently Discharged Veterans or Veterans to be
Discharged from the Military, continued
VA disability income verification will be placed on the COE. However, there are some
instances where this income is not placed on the COE which may include if the Veteran:
· will be discharging within the next 6 months from the military and has completed a
Physical Exam Board (PEB) or Medical Review Board (MEB) and will be filing for
VA disability while still on active duty,
· has recently filed for VA disability and VA’s Compensation Service has not yet made a
determination and would be entitled to receive VA disability benefits,
· would be entitled to receive VA disability benefits, but for the receipt of retired pay,
· has received VA disability benefits in the past, or
· is an unmarried surviving spouse of a Veteran who is eligible for or receiving
qualifying Disability and Indemnity Compensation (DIC), or
· is in receipt of a VA nonservice connected pension, or
· has a VA-appointed Fiduciary to handle financial matters.
If the Veteran falls under one of the above categories, perform the following:
· Submit by fax VA Form 26-8937, Verification of VA Benefits, to the VA Regional
Loan Center (RLC) where the subject property is located. VA will complete and return
the form to the lender by return fax.
· Provide any supporting documents, including the COE, if it states to send VA Form 26-
8937, Verification of Benefits to VA, to verify a Veteran’s monthly income from VA.
Please note that if VA’s Compensation Service has not yet issued a memo rating and/or
completed a claim for a Veteran, then the amount the Veteran may receive in the future
cannot be determined until the claim has been completed.
Until the Veteran begins receiving the monthly award, the amount cannot be placed on the
COE. A VA awards letter can be used to verify the amount and date a future monthly VA
compensation award will begin. However, the COE may be updated to reflect if the Veteran
is exempt from paying the VA funding fee on a future disability award. See Chapter 8 of this
handbook for funding fee exemptions.
The loan cannot be submitted for prior approval, or approved under the automatic procedure,
until the lender obtains the completed form from VA when the Veteran or surviving spouse is
under one of the above categories in subsection m of this topic. The lender must maintain the
completed form with the loan package.
If the form indicates that the borrower receives a non service-connected pension or has a VA
Fiduciary, the loan cannot be closed automatically. The loan must be uploaded in WebLGY
for prior approval. See Chapter 5 of this handbook for the necessary documentation that must
be submitted to VA.
VA must review, underwrite, and issue a Certificate of Commitment before the loan can
close. See Chapter 5 of this handbook for prior approval procedures.
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