e. What is Evidence of Guaranty?

Evidence of guaranty is VA Form 26-1899, Loan Guaranty Certificate (LGC), or is available through Electronic Data Interchange  (see section 7 of Current Issues).  These LGCs represent tangible proof to the lender that VA’s guaranty is given in good faith.  It is contingent upon:

·   the veteran, property and purpose of the loan being eligible

·   no fraud or material misrepresentation on the part of the lender, and

·   the lender’s compliance with applicable law and regulations.

For example, VA may deny or reduce payment on a future claim based on the lender or holder’s noncompliance whether or not VA has issued evidence of guaranty on the loan.

f. Total Loss of Guaranty

Willful fraud or material misrepresentation by the lender or holder, or by an agent of either, will relieve VA of liability for payment of any claim on the loan.  VA also has no liability in the case of

·   forgery on the note, mortgage, loan application, or other loan documents, or

·   a Certificate of Eligibility or discharge papers that are counterfeited, falsified, or not issued by the Government.

A holder of a VA loan who acquired the loan without notice or knowledge of fraud or material misrepresentation in procuring the guaranty, will not be denied payment of any claim on the loan by reason of such fraud or material misrepresentation.