I don’t normally write about “real life” situations, but we just had a VERY unusual Loan situation that invovled a Veteran, and I’d like to talk about it. I learned something from the experience, and if you or a family member feel you might be eligible for Reservist VA Home Loan Benefits, you might learn something too.
The Veteran contacted us, and provided us with a Certificate of Eligibility (COE) dated from 2014 when they had initially applied for a loan. They didn’t get the winning bid on the house, and waited a year to buy a new one. The Veteran also provided a DD Form 256 Honorable Discharge from the Navy Reserve. There was wording on the COE that indicated the Eligibility would change if the Veteran was discharged from Active Duty.
That’s where it got weird. The Veteran separated from the Navy in 2002.
We requested an updated Certificate of Eligibility from the Veterans Administration, since it was a year old. We can do this electronically – much like we can access certain IRS documentation.
They replied back that they needed a DD214 – not a DD 256H in order to process our request. The Veteran said they’d never received a DD214.
Reservist VA Home Loan Benefits
Members of the Reserve Corp only receive a DD Form 214 when they served on active duty. If you served in the Guard or Reserves, but were never activated, you may not have a DD Form 214. This is the case even if you successfully and honorably served your term. Guard and Reserve members who complete their term of service are issued a DD Form 256 (Honorable Discharge Certificate) or DD Form 257 (General Discharge Certificate) upon completion of their term.
The Veteran asked us to give them some details of exactly what we needed for their Reservist VA Home Loan Benefits… and why, so we contacted the Navy, and they told us the following:
1) Ask the borrower if they drilled at least once per year for the entire 6 years they were in the Navy. If they DID NOT drill at least once per year, they will not qualify for the benefit.
2) Ask the borrower if they were ever deployed. If they were deployed for at least 90 days, they will have a DD214 and that will need to be submitted.
3) If they drilled one per year for 6 years AND they were never deployed, then they will need to call the US Navy at 866-827-5672. They will ask them to provide them with a Point Statement that lists their honorable discharge.
We told the Veteran that unfortunately, there was a glitch in the system, and once we receive their Point Statement, we would upload that document into the existing reference number on the VA website.
The Veteran Gulped…. They had NOT served the required time to be eligible for VA Home Loan Benefits!!!
How did they initially receive a Certificate of Eligibility in 2014?? This was very strange, and the Veteran was obvious disappointed. They contacted the Veteran’s Administration, and here’s what they were told:
I have received a response from Veterans Affairs regarding my COE inquiry. Below is a portion of the VA’s reply…
“Response By Email (Department of Veterans Affairs) (08/2015 02:08 PM)
Good afternoon. In 2014, the system issued the COE stating that you were active duty because the online electronic application had not been completed. When a lender receives this type of certificate knowing you are not on active duty it prompts them to come to the VA to find out why it was issued that way. Unfortunately, when the lender received your certificate, he/she did not question the VA about that certificate you received in 2014.
When you reapplied we again asked for the information we need to qualify you. You must serve 6 years and drill all 6 of those years and receive an honorable discharge to receive the certificate. We apologize, and will have to have the information requested. You may obtain the information from:
NRPC 1070-124: Annual Retirement Point Record and form DD256
www.npc.navy.mil 1995 – present – 866-827-5672
Prior to 1995 – call Archives and must specifically request points record, not just the service jacket”
So, when the Reservist initially requested a Certificate of Eligibility through the Electronic System, they did not complete the entire application. It gave them an initial COE, however, it added the verbiage at the bottom. The original lender did not catch this problem. We did.
The GOOD NEWS HERE, is that the home and the borrower qualified for a USDA Home Loan, and they were still able to get into the home of their dreams.
Soooo. What would have happened if the mortgage company had closed the loan, with a bad COE? Well, first of all, the VA would not have Endorsed the Loan, because the Reservist VA Home Loan Benefits were not available to this Veteran.
There would have been some conversations to see what other loans they could make for the borrower (like the USDA Home Loan we were able to do). It would have to be re-closed, with a new note, etc… because it would NOT be a VA Loan. The PMI on VA Loans is different from a USDA Loan PMI – the answer is… it would be a freaking MESS!!!
If you are looking for a mortgage, or you want to know more about Reservist VA Home Loan Benefits – please call Steve and Eleanor Thorne 919 649 5058. We do TONS of First Time Home Buyer loans in NC, and we offer many folks the opportunity to buy a house using USDA Home Loans, VA Home Loans – down payment assistance programs… there are lots of ways to buy a house in NC with very little money out of your pocket!