c. How to Verify Exempt Status

The lender must verify exempt status by obtaining one of the following:

·   A properly completed and signed VA Form 26-8937, Verification of VA Benefit-Related Indebtedness, indicating the borrower’s exempt status

·   an award letter issued within 1 year of the date of the loan application indicating the veteran is entitled to receipt of VA disability compensation

·   for a veteran who elected service retirement pay instead of VA compensation, a copy of the original VA notification of disability rating and documentation of the veteran’s service retirement income, or

·   indications on the Certificate of Eligibility that the borrower is entitled as an unmarried surviving spouse.

Consult VA if the borrower’s status is unclear after reviewing the appropriate documents, or if conflicting information is found.

d. Loan Submissions Involving Exempt Borrowers

Submit a copy of the documentation used to verify exempt status with the closing package whenever no funding fee is remitted. 

Exception:  The lender does not have to submit the documentation if

·   the borrower is an eligible surviving spouse, or

·   the documentation had been previously provided to VA with the loan application as verification of the veteran’s income.