Deciphering the VA Lender’s Handbook Chapter 9 Part 8
In the last article we covered how a veteran can use an attorney-in-fact to execute a VA loan on his or her behalf. This makes getting a VA loan feasible for active-duty servicemembers who are stationed overseas to use their VA loan benefits at a time that works best for them, rather than having to wait until they return home. This also allows other veterans who feel they are too busy or would rather have a family member or friend work through the details on their VA loan to do so. At the end of the last article, we touched on the last thing a lender must do to make sure that the veteran is on board with both the VA loan and the person acting as the attorney-in-fact: verify that the veteran is not MIA if he or she is on active duty. The lender must sign the following certificate and submit it to the VA with the rest of the loan packet:
“The undersigned lender certifies that written evidence in the form of correspondence from the veteran or, if on active military duty, statement of his or her commanding officer (including statement of person authorized to act for said officer), affirmatively indicating that the veteran was alive and, if the veteran is on active military duty, not missing in action status on (date), was examined by the undersigned and that the said date is subsequent to the date the note and security instruments were executed on the veteran’s behalf by the attorney-in-fact.”
Even if the veteran is not on active duty, the lender is still required to verify that the veteran is still alive before making the VA loan. In the event that the veteran is on active duty and the lender is having trouble obtaining verification that the veteran is alive and not MIA, the VA may assist the veteran in obtaining verification. You as the borrower should know that your VA loan cannot be closed until final verification is received from you, so do your best to make yourself available with the limited amount of control you have when stationed overseas. Remember, that even if the loan is closed, if insufficient verification was provided, the VA can deny guaranty on the loan, causing major problems for both the lender and you as the borrower.
Hopefully, borrowers will understand why lenders will be unwilling to close on the loan until sufficient verification is obtained, because lenders can be extremely insistent on obtaining that verification and borrowers who don’t understand why can grow frustrated or annoyed at the persistent hagglings of their lender. To drive the point home, here’s a paragraph from the Handbook: “VA will issue a Certificate of Commitment only if the veteran has executed a valid and legally adequate power of attorney and consented to the specific transaction (as described under the “Requirement” heading). If VA has information that the veteran is MIA or deceased, VA will not issue a commitment.”
In other words, if the lender doesn’t get sufficient verification before the loan closes, the VA will not guaranty the loan, making the loan as risky as a conventional loan for the lender, and even more so since the down payment made on the VA loan was probably significantly less than 20%. Now, there is the possibility for the VA to make a hardship exception if the proper verification is extremely difficult to obtain, but that is something your lender will work with the VA on only after trying very hard to get the verification from you.
In most cases, getting this final verification is not a big deal; it’s fairly simple and straightforward, and most veterans who use attorneys-in-fact do not have trouble with this portion. Remember though, that the verification is not optional, and the easier you can make it on the lender, the easier it will be on you as well.