Announcement 2021-022 - Enhancements to COE

NewRez associates and clients, please note, the VA has recently made enhancements to the Certificate of Eligibility (COE) that will reduce instances in which lenders will need to utilize VA Form 26-8937, Verification of VA Benefits to verify a Veteran’s receipt of income from the VA, such as compensation for a service-connected disability or non-service-connection pension. The COE enhancements are expected to provide more certainty whether to collect a funding fee from Veterans who are rated as eligible to receive compensation either as the result of a pre-discharge disability examination and rating or based on a pre-discharge review of existing medical evidence that results in the issuance of a Memorandum Rating.

 

In cases where the lender needs additional benefit information from the VA that is not indicated on the COE, the submission of the VA Form 26-8937 will still be necessary. Cases, for example, that would require a Form 26-8937 submission would include the following:

 

  • Active-duty Service member who has received a proposed or memorandum rating or a predischarge claim for VA disability compensation that is pending;
  • A COE condition expressly states that VA Form 26-8937 must be submitted to VA;
  • System limitations that cause anomalies on the COE and lenders are unable to resolve after calling VA at 877-827-3702;
  • Verify funding fee exempt status on IRRRL for surviving spouse, who is a co-borrower on VA loan with a Veteran who is now deceased and who might have been exempt. The surviving spouse cannot be assumed to be exempt from VA Funding Fee in this situation unless surviving spouse is in receipt of Dependency Indemnification Compensation (DIC).

 

The VA has also established a new process for submitting the VA Form 26-8937.  The submission will be done through the Automated Certificate of Eligibility application in WebLGY.  See VA training webinar listed in below link for instructions. The VA will no longer process faxed or emailed copies of the 26-8937. 

 

Resource Links

VA Circular 26-21-03 Certificate of Eligibility Enhancements to Streamline Income Verification

VA Recorded Training Webinar on COE Enhancements and new process for submitting VA Form 26-8937

VA Form 26-8937