Written by Isaac F. Davis
Many VA mortgage lenders use VA Form 26-8937, otherwise known as Verification of VA Benefits if the applicant:
- receives VA disability payments
- has received VA disability payments previously
- receives retired pay instead of VA disability payments
- filed a claim for VA disability benefits prior to discharge from active duty service
- is a surviving spouse of a veteran who died on active duty or as a result of a service-connected disability
VA Form 26-8937 helps provide proof of VA disability compensation or a non-service-connected pension. It also can help show whether the veteran has been rated by the VA as incompetent. Lenders will ask VA loan applicants to fill out Form 26-8937 so that it can be submitted to the VA prior to loan underwriting.
The reason for this is that most VA borrowers who meet the criteria for being a disabled veteran, a surviving spouse or incompetent do not have to pay the VA funding fee. The savings to those who are exempt from the funding fee range from .5 percent to 3.3 percent depending on the type of VA loan and military status. If it is discovered that a borrower is exempt after closing a VA loan, then a refund of the VA funding fee would be issued. VA loan applicants should understand what’s being asked on VA Form 26-8937.
The following information is requested on the Form:
- Veteran/VA Loan Applicant name
- Current Address
- Date of Birth
- VA Claim Folder Number (C-File Number for compensation)
- Social Security Number
- Service Number (if different than SSN)
- Records of any VA benefit-related Indebtedness (unpaid)
The VA loan applicant’s name entered on the form needs to match the VA records for a veteran disability or surviving spouse claim. And, the address provided should be the current place of residence, not the address of the home that is being purchased.
The VA assigns a number to reference the claim file (C-file) whenever a disability or surviving spouse claim is made. The form asks for a VA claim folder number, referring to the C-file number. If the applicant cannot find the C-file number, it is okay to leave this blank on the VA Form 26-8937.
Next, a social security and service number is required on the Form. Sometimes, a military member serves under a social security number (SSN) rather than a military service number. A SSN may only be necessary if an applicant has no service number.
The last section of VA Form 26-8937 regards VA benefit-related indebtedness. To the best of his or her knowledge, the VA loan applicant must record VA benefit-related indebtedness if:
- An overpayment of VA education, compensation, or pension benefits occurred
- A VA education loan or direct VA home loan was defaulted
- Payment of a claim on a prior guaranteed home loan resulted in VA loss
- Repayment plans for any of VA debts are delayed
Completed and signed Forms are submitted by the lender to the appropriate VA Regional Loan Center for processing. Lenders will keep the processed form with the loan origination package.
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