May 5, 1997 M26-1, Revised

Change 1

Chapter 2 Veterans\' Eligibility and Entitlement

CONTENTS

  ------------- ------------------------------------------------------- ----------
  **Section**   **Title**                                               **Page**

                How to Use this Chapter                                 2-ii

                **BASIC ELIGIBILITY REQUIREMENTS**                      

  2.01          General Rule for Determining Eligibility                2-1

  2.02          Exceptions to the 2-Year Requirement                    2-4

  2.03          Exception-Selected Reserve Including National Guard and 2-8
                Air National Guard                                      

  2.04          Exception-Veteran Discharged or Released for a          2-14
                Service-Connected Disability                            

  2.05          Exception-Unremarried Surviving Spouse of Veteran Who   2-15
                Died While in Service or from a Service-Connected       
                Disability                                              

  2.06          Exception-Spouse of Serviceperson Missing in Action or  2-17
                Prisoner of War                                         

  2.07          Exception-Service with Allied Countries in World War II 2-19

  2.08          Exception-Other Types of Qualifying Service during      2-23
                World War II and/or Later                               

  2.09          Rules for Calculating Length of Active Duty Service     2-29

  2.10          Rules for Determining Character of Service              2-32

                **CALCULATING ENTITLEMENT**                             

  2.11          Procedure for Calculating the Amount of Entitlement     2-34

  2.12          Restoration of Entitlement                              2-35

                **PROCESSING CERTIFICATE OF ELIGIBILITY REQUESTS**      

  2.13          How to Process Application and Issue COE or Denial      2-48

  2.14          How to Process Veteran\'s Appeal of an Eligibility      2-61
                Denial                                                  

                **FHA CERTIFICATE OF VETERAN STATUS**                   

  2.15          FHA Loans for Veterans-Certificate of Veteran Status    2-62

  \[Exhibit 2-A **QUICK REFERENCE TABLE FOR VA ELIGIBILITY**            2-67\]
  ------------- ------------------------------------------------------- ----------

2-i

M26-1, Revised May 5, 1997

Change 1

How to Use this Chapter

+------------+---------------------------------------------------------+
| In         | > VA home loan eligibility and entitlement are complex  |
| troduction | > because the laws governing them contain so many       |
|            | > different requirements, and exceptions to those       |
|            | > requirements.                                         |
|            | >                                                       |
|            | > • Obtain a good working knowledge of the basic rules  |
|            | > and procedures explained in this chapter              |
|            | > [before]{.underline} attempting to make eligibility   |
|            | > and entitlement determinations.                       |
|            | >                                                       |
|            | > • Become familiar with the structure of the chapter   |
|            | > in order to [confirm that all applicable rules and    |
|            | > exceptions have been considered in evaluating each    |
|            | > applicant\'s eligibility]{.underline}.                |
+------------+---------------------------------------------------------+

+------------+---------------------+-----------------------------------+
|            | **Section**         | **Heading**                       |
+------------+---------------------+-----------------------------------+
| **Subjects | **2.01** General    | • General Rule for Eligibility    |
| in this    | Rule for            |                                   |
| Chapter**  | Determining         | • Wartime and Peacetime           |
|            | Eligibility         |                                   |
|            |                     | • Eligibility Examples            |
|            |                     |                                   |
|            |                     | • Veteran Still on Active Duty    |
|            |                     |                                   |
|            |                     | • Specifics on 2-Year Requirement |
|            |                     |                                   |
|            |                     | • Procedure for Determining       |
|            |                     | Eligibility                       |
|            |                     |                                   |
|            |                     | • Exceptions                      |
|            |                     |                                   |
|            |                     | • Applicable Law                  |
+------------+---------------------+-----------------------------------+
|            | **2.02** Exceptions | • Exceptions                      |
|            | to the 2-Year       |                                   |
|            | Requirement         | • Example                         |
|            |                     |                                   |
|            |                     | • Special Procedures for \"Still  |
|            |                     | on Active Duty\" Exception        |
|            |                     |                                   |
|            |                     | • Specifics on \"Early Out\"      |
|            |                     | Exception                         |
|            |                     |                                   |
|            |                     | • Specifics on \"Reduction in     |
|            |                     | Force\" Exception                 |
|            |                     |                                   |
|            |                     | • Specifics on Hardship Exception |
|            |                     |                                   |
|            |                     | • Pregnancy Discharge             |
+------------+---------------------+-----------------------------------+

Continued on next page

2-ii

September 16, 1996 M26-1, Revised

How to Use this Chapter, Continued

+------------+---------------------+-----------------------------------+
|            | **Section**         | **Heading**                       |
+------------+---------------------+-----------------------------------+
| **Subjects | **2.03**            | • Selected Reserve Defined        |
| in this    | Exception-Selected  |                                   |
| Chapter**  | Reserve Including   | • Exception                       |
| (          | National Guard and  |                                   |
| continued) | Air National Guard  | • Examples                        |
|            |                     |                                   |
|            |                     | • Applicability of Other          |
|            |                     | Exceptions                        |
|            |                     |                                   |
|            |                     | • Active Duty for Training        |
|            |                     |                                   |
|            |                     | **•** Active Duty for National    |
|            |                     | Guard Members                     |
|            |                     |                                   |
|            |                     | • Active Duty Under Executive     |
|            |                     | Order 10957                       |
|            |                     |                                   |
|            |                     | • Active Duty during Persian Gulf |
|            |                     | War                               |
|            |                     |                                   |
|            |                     | • Determining the Date Reserve or |
|            |                     | Guard Service Begins              |
|            |                     |                                   |
|            |                     | • Character of Service            |
|            |                     |                                   |
|            |                     | • Application Materials           |
|            |                     |                                   |
|            |                     | • Consult Central Office or Not?  |
|            |                     |                                   |
|            |                     | • Special Procedures              |
+------------+---------------------+-----------------------------------+
|            | **2.04**            | • Exception                       |
|            | Exception-Veteran   |                                   |
|            | Discharged or       | • Example                         |
|            | Released for a      |                                   |
|            | Service-Connected   | • Application Materials           |
|            | Disability          |                                   |
|            |                     | • Refer Case to Adjudication or   |
|            |                     | Not?                              |
|            |                     |                                   |
|            |                     | • What to Include in Referral     |
+------------+---------------------+-----------------------------------+
|            | **2.05**            | • Exception                       |
|            | Ex                  |                                   |
|            | ception-Unremarried | • Example                         |
|            | Surviving Spouse of |                                   |
|            | Veteran Who Died    | • Entitlement                     |
|            | While in Service or |                                   |
|            | from a              | • Application Materials           |
|            | Service-Connected   |                                   |
|            | Disability          | • Special Procedures              |
+------------+---------------------+-----------------------------------+
|            | **2.06**            | • Exception                       |
|            | Exception-Spouse of |                                   |
|            | Serviceperson       | • Entitlement                     |
|            | Missing in Action   |                                   |
|            | or Prisoner of War  | • Application Materials           |
|            |                     |                                   |
|            |                     | • Special Procedures              |
+------------+---------------------+-----------------------------------+
|            | **2.07**            | • Exception                       |
|            | Exception-Service   |                                   |
|            | with Allied         | • Qualifying Allied Countries     |
|            | Countries in World  |                                   |
|            | War II              | • Application Materials           |
|            |                     |                                   |
|            |                     | • Refer Case to Central Office or |
|            |                     | Not?                              |
|            |                     |                                   |
|            |                     | • What to Include in Referral     |
|            |                     |                                   |
|            |                     | • Specifics on Service in the     |
|            |                     | Canadian Armed Forces             |
+------------+---------------------+-----------------------------------+

2-iii

Continued on next page

M26-1, Revised September 16, 1996

How to Use this Chapter, Continued

+------------+---------------------+-----------------------------------+
|            | **Section**         | **Heading**                       |
+------------+---------------------+-----------------------------------+
| **Subjects | **2.08**            | • Exception for Service During    |
| in this    | Exception-Other     | World War II                      |
| Chapter**  | Types of Qualifying |                                   |
| (          | Service during      | • Exception for Service During    |
| continued) | World War II and    | World War II and/or Later         |
|            | Later               |                                   |
|            |                     | • Specifics on Commissioned       |
|            |                     | Officers of the Public Health     |
|            |                     | Service                           |
|            |                     |                                   |
|            |                     | • Applicability of Other          |
|            |                     | Exceptions                        |
|            |                     |                                   |
|            |                     | • Refer Case to Central Office or |
|            |                     | Not?                              |
|            |                     |                                   |
|            |                     | • What to Include in Referral     |
|            |                     |                                   |
|            |                     | • Assistance with Documentation   |
+------------+---------------------+-----------------------------------+
|            | **2.09** Rules for  | • Purpose                         |
|            | Calculating Length  |                                   |
|            | of Active Duty      | • Procedures for Calculating      |
|            | Service             | Length of Active Service          |
|            |                     |                                   |
|            |                     | • Tacking Rule                    |
|            |                     |                                   |
|            |                     | • Example                         |
|            |                     |                                   |
|            |                     | • Lost Time                       |
|            |                     |                                   |
|            |                     | • Qualifying Lost Time            |
|            |                     |                                   |
|            |                     | • Nonqualifying Lost Time         |
|            |                     |                                   |
|            |                     | • Other Nonqualifying Time        |
|            |                     |                                   |
|            |                     | • Reserves or National Guard      |
|            |                     |                                   |
|            |                     | • Travel Time                     |
|            |                     |                                   |
|            |                     | • Service for Pay Purposes        |
+------------+---------------------+-----------------------------------+
|            | **2.10** Rules for  | • Purpose                         |
|            | Determining         |                                   |
|            | Character of        | • Acceptable Proof                |
|            | Service             |                                   |
|            |                     | • Refer Case to Adjudication or   |
|            |                     | Not?                              |
|            |                     |                                   |
|            |                     | • More Than One Period of Service |
|            |                     |                                   |
|            |                     | • Active Duty                     |
|            |                     |                                   |
|            |                     | • Extension of Enlistment         |
|            |                     |                                   |
|            |                     | • Reserve/Guard Members           |
+------------+---------------------+-----------------------------------+
|            | **2.11** Procedure  | • Procedures                      |
|            | for Calculating the |                                   |
|            | Amount of           | • History of Entitlement Maximums |
|            | Entitlement         |                                   |
+------------+---------------------+-----------------------------------+

Continued on next page

2-iv

September 16, 1996 M26-1, Revised

How to Use this Chapter, Continued

+------------+---------------------+-----------------------------------+
|            | **Section**         | **Heading**                       |
+------------+---------------------+-----------------------------------+
| **Subjects | **2.12**            | • General Rule for Restoration of |
| in this    | Restoration of      | Entitlement                       |
| Chapter**  | Entitlement         |                                   |
| (          |                     | • Specifics on \"Disposal and     |
| continued) |                     | Repayment\"                       |
|            |                     |                                   |
|            |                     | • Specifics on Refinance          |
|            |                     |                                   |
|            |                     | • Specifics on One Time           |
|            |                     | Restoration                       |
|            |                     |                                   |
|            |                     | • Specifics on Substitution of    |
|            |                     | Entitlement                       |
|            |                     |                                   |
|            |                     | • Examples                        |
|            |                     |                                   |
|            |                     | • Waiver of Restoration           |
|            |                     | Requirements                      |
|            |                     |                                   |
|            |                     | • Procedures                      |
|            |                     |                                   |
|            |                     | • Coding                          |
+------------+---------------------+-----------------------------------+
|            | **2.13** How to     | • Who Does it?                    |
|            | Process Application |                                   |
|            | and Issue COE or    | • What Does Application Consist   |
|            | Denial              | Of?                               |
|            |                     |                                   |
|            |                     | • Acceptable Proof of Military    |
|            |                     | Service                           |
|            |                     |                                   |
|            |                     | • Duplicate COEs                  |
|            |                     |                                   |
|            |                     | • First, Review the Documents     |
|            |                     | Received                          |
|            |                     |                                   |
|            |                     | • Evaluate Basic Eligibility      |
|            |                     |                                   |
|            |                     | • If Applicant is Not Eligible    |
|            |                     |                                   |
|            |                     | • Calculate Amount of Entitlement |
|            |                     | for Eligible Applicants           |
|            |                     |                                   |
|            |                     | • Select COE Form                 |
|            |                     |                                   |
|            |                     | • Storage of Blank COE Forms      |
|            |                     |                                   |
|            |                     | • Complete the COE                |
|            |                     |                                   |
|            |                     | • Retention of COE When Prior     |
|            |                     | Approval Loan Pending             |
|            |                     |                                   |
|            |                     | • Issuance of COEs by Veterans    |
|            |                     | Benefits Counselors (VBC)         |
+------------+---------------------+-----------------------------------+
|            | **2.14** How to     | • How is an Appeal Initiated?     |
|            | Process Veteran\'s  |                                   |
|            | Appeal of an        | • How to Begin Processing an      |
|            | Eligibility Denial  | Appeal                            |
|            |                     |                                   |
|            |                     | • How to Process an Appeal to the |
|            |                     | Board of Veterans Appeals         |
|            |                     |                                   |
|            |                     | • FHA-VA Benefit Decisions        |
+------------+---------------------+-----------------------------------+

Continued on next page

2-v

M26-1, Revised September 16, 1996

How to Use this Chapter, Continued

+------------+---------------------+-----------------------------------+
|            | **Section**         | **Heading**                       |
+------------+---------------------+-----------------------------------+
| **Subjects | **2.15** FHA Loans  | • What is the Program?            |
| in this    | for                 |                                   |
| Chapter**  | V                   | • FHA Eligibility                 |
| (          | eterans-Certificate |                                   |
| continued) | of Veteran Status   | • Application Forms and           |
|            |                     | Documentation                     |
|            |                     |                                   |
|            |                     | • How to Process the Application  |
|            |                     |                                   |
|            |                     | • How to Issue the Certificate    |
|            |                     |                                   |
|            |                     | • Duplicate Certificates          |
|            |                     |                                   |
|            |                     | • If Applicant is Not Eligible    |
|            |                     |                                   |
|            |                     | • Disposition of Records          |
+------------+---------------------+-----------------------------------+

2-vi

May 5, 1997 M26-1, Revised Change 1

2.01 General Rule for Determining Eligibility

+------------+---------------------------------------------------------+
| General    | > A veteran is eligible for VA home loan benefits if he |
| Rule for   | > or she served on active duty in the Army, Navy, Air   |
| E          | > Force, Marine Corps, or Coast Guard and was           |
| ligibility | > discharged under conditions other than dishonorable   |
|            | > after either:                                         |
|            | >                                                       |
|            | > • 90 days or more, any part of which occurred during  |
|            | > wartime                                               |
|            | >                                                       |
|            | > OR                                                    |
|            | >                                                       |
|            | > • 181 continuous days or more (peacetime).            |
|            | >                                                       |
|            | > **[2-Year Requirement:]{.underline}** A greater       |
|            | > length of service requirement must be met by a        |
|            | > veteran who:                                          |
|            | >                                                       |
|            | > • Enlisted (and service began) after September 7,     |
|            | > 1980                                                  |
|            | >                                                       |
|            | > OR                                                    |
|            | >                                                       |
|            | > • Was an officer and service began after October 16,  |
|            | > 1981.                                                 |
|            | >                                                       |
|            | > These veterans must have completed either:            |
|            | >                                                       |
|            | > • 24 continuous months or more                        |
|            | >                                                       |
|            | > OR                                                    |
|            | >                                                       |
|            | > • The full period for which ordered to active duty,   |
|            | > but not less than 90 days (any part during wartime)   |
|            | > or 181 continuous days (peacetime).                   |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| Wartime    | > Wartime and peacetime, as used in the General Rule    |
| and        | > for Eligibility, refer to the following periods of    |
| Peacetime  | > time.                                                 |
+------------+---------------------------------------------------------+

+----------------------------------+-----------------------------------+
| **Wartime**                      | **Peacetime**                     |
+----------------------------------+-----------------------------------+
| World War II                     | Post-World War II period          |
|                                  |                                   |
| 9/16/40 - 7/25/47                | 7/26/47 - 6/26/50                 |
+----------------------------------+-----------------------------------+
| Korean conflict                  | Post-Korean period                |
|                                  |                                   |
| 6/27/50 - 1/31/55                | 2/1/55 - 8/4/64                   |
+----------------------------------+-----------------------------------+
| Vietnam era                      | Post-Vietnam period               |
|                                  |                                   |
| 8/5/64 - 5/7/75                  | 5/8/75 - 8/1/90                   |
+----------------------------------+-----------------------------------+
| Persian Gulf War                 |                                   |
|                                  |                                   |
| 8/2/90 - undetermined            |                                   |
+----------------------------------+-----------------------------------+
| \[\*The Vietnam era begins       |                                   |
| 2/28/61 for individuals who      |                                   |
| served in the Republic of        |                                   |
| Vietnam.\]                       |                                   |
+----------------------------------+-----------------------------------+

  ------------- ----------------------------------------------------------
  Eligibility   John served 90 days active duty, 89 in peacetime, and 1
  Example       during the Korean conflict. He is eligible.

  ------------- ----------------------------------------------------------

Continued on next page 2-1

M26-1, Revised

Change 1 May 5, 1997

2.01 General Rule for Determining Eligibility, Continued

+------------+---------------------------------------------------------+
| E          | > Jane, a National Guard member, completed 90 days      |
| ligibility | > active duty as AGR (Active Duty Guard/Reserve) under  |
| Example    | > title 10 U.S.C. in 1979. In 1981 she completed        |
|            | > another active duty assignment under title 10. The    |
|            | > orders called for 24 months, but she was released     |
|            | > after 18 months. She is not eligible based on her     |
|            | > 1979 service because she did not complete 181 days    |
|            | > [and]{.underline} she is not eligible based on her    |
|            | > 1981 service because she did not complete 24 months.  |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| Veteran    | > A veteran who is currently serving on active duty and |
| Still on   | > meets all requirements of the General Rule for        |
| Active     | > Eligibility, but has never received a discharge       |
| Duty       | > evidencing \"other than dishonorable\" service, is    |
|            | > considered eligible until or unless he or she later   |
|            | > receives a discharge under dishonorable conditions.   |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| Specifics  | > Generally, [both enlistment and commencement of       |
| on         | > active duty]{.underline} in a regular component of    |
|            | > the Armed Forces must have occurred [after            |
| 2-Year     | > 9/7/80]{.underline} for the 2-Year Requirement to     |
| R          | > apply. (I.e., the 2-Year Requirement does not apply   |
| equirement | > if the individual was already serving in the Armed    |
|            | > Forces on or before 9/7/80, when an overlap occurs.)  |
|            | > However, the 2-Year Requirement applies to            |
|            | > individuals who [enlisted before 9/7/80]{.underline}  |
|            | > if:                                                   |
|            | >                                                       |
|            | > • They were [separated from service without           |
|            | > completing 90 or 181 days]{.underline}, [then began   |
|            | > active duty after 9/7/80]{.underline}, regardless of  |
|            | > any Reserve duty prior to that date                   |
|            | >                                                       |
|            | > OR                                                    |
|            | >                                                       |
|            | > • Enlistment was under the [Delayed Entry             |
|            | > Program]{.underline} and active duty began after      |
|            | > 9/7/80.                                               |
|            | >                                                       |
|            | > Refer the case to Central Office (264) if the         |
|            | > applicant has enlisted service in other than a        |
|            | > regular component of the Armed Forces and it is       |
|            | > unclear whether the 2-Year Requirement applies.       |
+------------+---------------------------------------------------------+

Continued on next page

2-2

September 16, 1996 M26-1, Revised

2.01 General Rule for Determining Eligibility, Continued

+------------+---------------------------------------------------------+
| Procedure  | > Always follow these steps when making an eligibility  |
| for        | > determination.                                        |
| D          |                                                         |
| etermining |                                                         |
| E          |                                                         |
| ligibility |                                                         |
+------------+---------------------------------------------------------+

+-------+--------------------------------------------------------------+
| **S   | **Action**                                                   |
| tep** |                                                              |
+-------+--------------------------------------------------------------+
| 1     | Apply the General Rule for Eligibility.                      |
|       |                                                              |
|       | • Sections 2.09 and 2.10 provide rules for determining the   |
|       | length and character of service.                             |
|       |                                                              |
|       | Is applicant eligible?                                       |
|       |                                                              |
|       | • If [yes]{.underline}, go no further.                       |
|       |                                                              |
|       | • If [no]{.underline}, go to Step 2.                         |
+-------+--------------------------------------------------------------+
| 2     | Review the list of exceptions. Are there any that            |
|       | [might]{.underline} apply?                                   |
|       |                                                              |
|       | If [yes]{.underline}, go to Step 3.                          |
|       |                                                              |
|       | If [no]{.underline}, go no further. Applicant is not         |
|       | eligible.                                                    |
+-------+--------------------------------------------------------------+
| 3     | Review the detailed section(s) of this chapter on the        |
|       | exception(s) that might apply before making an eligibility   |
|       | determination                                                |
+-------+--------------------------------------------------------------+

+------------+---------------------------------------------------------+
| Exceptions | > This table lists the categories of exceptions to the  |
|            | > General Rule for Eligibility that may be used to      |
|            | > establish eligibility, and the detailed section in    |
|            | > this manual that explains each exception.             |
+------------+---------------------------------------------------------+

+--------------------------------------------------------------+-------+
| **Category of Exception**                                    | *     |
|                                                              | *Sect |
|                                                              | ion** |
+--------------------------------------------------------------+-------+
| Exceptions to the 2-Year Requirement                         | >     |
|                                                              |  2.02 |
| • Still on active duty                                       |       |
|                                                              |       |
| • Compensable service-connected disability                   |       |
|                                                              |       |
| • Discharge or release for:                                  |       |
|                                                              |       |
| ♦ Early Out                                                  |       |
|                                                              |       |
| ♦ Convenience of the Government after 20 months service      |       |
|                                                              |       |
| ♦ Reduction-in-Force                                         |       |
|                                                              |       |
| ♦ Hardship                                                   |       |
|                                                              |       |
| ♦ Preexisting medical condition                              |       |
|                                                              |       |
| ♦ Certain physical or mental conditions                      |       |
+--------------------------------------------------------------+-------+
| Selected Reserve Including National Guard and Air National   | >     |
| Guard                                                        |  2.03 |
+--------------------------------------------------------------+-------+
| Veteran Discharged or Released for a Service-Connected       | >     |
| Disability                                                   |  2.04 |
+--------------------------------------------------------------+-------+

Continued on next page

2-3

M26-1, Revised September 16, 1996

2.01 General Rule for Determining Eligibility, Continued

  -----------------------------------------------------------------------
  Exceptions (continued)

  -----------------------------------------------------------------------

+-------------------------------------------------------------+--------+
| **Category of Exception**                                   | **Sec  |
|                                                             | tion** |
+-------------------------------------------------------------+--------+
| Unremarried Surviving Spouse of Veteran Who Died While in   | > 2.05 |
| Service or from a Service-Connected Disability              |        |
+-------------------------------------------------------------+--------+
| Spouse of Serviceperson Missing in Action or Prisoner of    | > 2.06 |
| War                                                         |        |
+-------------------------------------------------------------+--------+
| Service with Allied Countries in World War II               | > 2.07 |
+-------------------------------------------------------------+--------+
| Other Types of Qualifying Service during World War II and   | > 2.08 |
| Later                                                       |        |
+-------------------------------------------------------------+--------+

Error: Reference source not found

+------------+---------------------------------------------------------+
| Applicable | > The law pertaining to eligibility can be found as     |
| Law        | > follows:                                              |
+------------+---------------------------------------------------------+

+-------------------------------------------+--------------------------+
| **Subject**                               | **Law**                  |
+-------------------------------------------+--------------------------+
| General Rule for Eligibility and          | > 38 U.S.C. 3701 and     |
| Exceptions                                | > 3702                   |
+-------------------------------------------+--------------------------+
| 2-Year Requirement                        | > 38 U.S.C. 5303A        |
|                                           | >                        |
| • Early Out Discharge                     | > 10 U.S.C. 1171         |
|                                           | >                        |
| • Hardship Discharge                      | > 10 U.S.C. 1173         |
|                                           | >                        |
| • All Other Exceptions to the 2-Year      | > 38 U.S.C. 5303A        |
| Requirement                               |                          |
+-------------------------------------------+--------------------------+

2.02 Exceptions to the 2-Year Requirement

+------------+---------------------------------------------------------+
| Exceptions | > A veteran meeting the criteria for the following      |
|            | > exceptions to the General Rule for Eligibility does   |
|            | > not have to meet the 2-Year Requirement:              |
|            | >                                                       |
|            | > • Veteran discharged or released for a                |
|            | > [service-connected disability]{.underline} (see       |
|            | > section 2.04)                                         |
|            | >                                                       |
|            | > • [Unremarried surviving spouse]{.underline} of a     |
|            | > veteran who died while in service or from a           |
|            | > service-connected disability (see section 2.05)       |
|            | >                                                       |
|            | > • Spouse of a serviceperson [missing in action or     |
|            | > prisoner of war]{.underline} (see section 2.06).      |
+------------+---------------------------------------------------------+

Continued on next page

2-4

September 16, 1996 M26-1, Revised

2.02 Exceptions to the 2-Year Requirement, Continued

  -----------------------------------------------------------------------
  Exceptions (continued)

  -----------------------------------------------------------------------

+------------+---------------------------------------------------------+
|            | > In addition, a veteran subject to the 2-Year          |
|            | > Requirement is eligible if he or she [has met the 90  |
|            | > or 181 day requirement]{.underline} of the General    |
|            | > Rule for Eligibility, but [has not met the 2-Year     |
|            | > Requirement]{.underline}, and either:                 |
|            | >                                                       |
|            | > • Is [still on active duty]{.underline}               |
|            | >                                                       |
|            | > • Was discharged for reasons other than a             |
|            | > service-connected disability and was later determined |
|            | > to have a [compensable service-connected              |
|            | > disability]{.underline}                               |
|            | >                                                       |
|            | > OR                                                    |
|            | >                                                       |
|            | > • Was [discharged or released]{.underline} from       |
|            | > active duty [due to]{.underline}:                     |
|            |                                                         |
|            | ♦ [Early out]{.underline} under 10 U.S.C. 1171          |
|            |                                                         |
|            | ♦ [Convenience of the Government]{.underline} after     |
|            | completing more than 20 months of a 2-year enlistment   |
|            |                                                         |
|            | ♦ Convenience of the Government due to                  |
|            | [Reduction-in-Force]{.underline} (must be involuntary)  |
|            |                                                         |
|            | ♦ [Hardship]{.underline} under 10 U.S.C. 1173           |
|            |                                                         |
|            | ♦ [Medical Condition]{.underline} which preexisted      |
|            | service and has not been determined to be               |
|            | service-connected                                       |
|            |                                                         |
|            | OR                                                      |
|            |                                                         |
|            | ♦ [Physical or mental condition]{.underline} not        |
|            | characterized as a disability and not the result of     |
|            | misconduct but which did interfere with the             |
|            | individual\'s performance of duty.                      |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| Example    | > Judy served only one day of active duty in 1983       |
|            | > before being discharged for a service-connected       |
|            | > disability. She is eligible.                          |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| Example    | > Donald is discharged because of a preexisting medical |
|            | > condition after serving only 76 days. While this type |
|            | > of discharge is an allowable exception to the 2-year  |
|            | > requirement, Donald is still not eligible because he  |
|            | > served less than the required 90 or 181 days.         |
+------------+---------------------------------------------------------+

Continued on next page

2-5

M26-1, Revised September 16, 1996

2.02 Exceptions to the 2-Year Requirement, Continued

+------------+---------------------------------------------------------+
| Special    | > Follow these procedures for an applicant who [has not |
| P          | > met the 2-Year Requirement]{.underline} but is        |
| roce-dures | > eligible because he or she is [still on active duty   |
| for        | > and has met the 90 or 181 day                         |
| \"Still on | > requirement]{.underline} of the General Rule for      |
| Active     | > Eligibility. A statement of service signed by or at   |
| Duty\"     | > the direction of the adjutant or personnel officer or |
| Exception  | > commanding officer of the applicant\'s unit is        |
|            | > required as proof of military service.                |
+------------+---------------------------------------------------------+

+---------------------+------------------------------------------------+
| **IF**              | **THEN**                                       |
+---------------------+------------------------------------------------+
| Applicant is        | Check block on COE which reads \"Valid unless  |
| eligible by reason  | discharged or released subsequent to date of   |
| of this exception   | this certificate. A certification of           |
| and is still on     | continuous active duty as of date of note is   |
| active duty         | required.\"                                    |
+---------------------+------------------------------------------------+
| Veteran             | 1\. Do not restore entitlement used for a loan |
| subsequently fails  | while in service or allow the use of any       |
| to complete 2 years | remaining entitlement.                         |
| or the full period  |                                                |
| for which ordered   | 2\. Do not return any COE received for         |
| to active duty, or  | updating or with a restoration request.        |
| is dishonorably     |                                                |
| discharged, and is  | 3\. Notify the veteran in writing of the       |
| no longer eligible  | reason for lost eligibility, including         |
|                     | information on appeal rights.                  |
|                     |                                                |
|                     | 4\. Dispose of the COE in accordance with RCS  |
|                     | VB-1, part I, item No. 12-061.100.             |
+---------------------+------------------------------------------------+

+------------+---------------------------------------------------------+
| Specifics  | > An early-out discharge under 10 U.S.C. 1171 is        |
| on \"Early | > available only:                                       |
| Out\"      | >                                                       |
| Exception  | > • To enlisted persons                                 |
|            |                                                         |
|            | ♦ Cannot apply to PHS (Public Health Service) or NOAA   |
|            | (National Oceanic and Atmospheric Administration) since |
|            | only officers serve in these organizations              |
|            |                                                         |
|            | > • Within 3 months before expiration of the term of    |
|            | > enlistment or extended enlistment                     |
|            |                                                         |
|            | ♦ Applicant with an early-out discharge after serving   |
|            | 33 months of a 3 year enlistment meets the 2-year       |
|            | requirement in any case                                 |
|            |                                                         |
|            | ♦ Applicant with an early-out discharge after 21 months |
|            | served of a 2 year enlistment must fall under this      |
|            | exception to be eligible.                               |
+------------+---------------------------------------------------------+

2-6

Continued on next page

September 16, 1996 M26-1, Revised

2.02 Exceptions to the 2-Year Requirement, Continued

  -----------------------------------------------------------------------
  Specifics on \"Early Out\" Exception (continued)

  -----------------------------------------------------------------------

+----------+-----------------------------------------------------------+
|          | > Narrative reasons for separation on discharge papers    |
|          | > which qualify as \"early out\" are as follows:          |
|          | >                                                         |
|          | > • Overseas returnee                                     |
|          | >                                                         |
|          | > • Assignment to installation or unit scheduled for      |
|          | > deactivation or permanent change of station             |
|          | >                                                         |
|          | > • Separation from medical holding detachment/company    |
|          | >                                                         |
|          | > • Acceptance into ROTC (Reserve Officers Training       |
|          | > Corps)                                                  |
|          | >                                                         |
|          | > • Secretarial authority; e.g., directed by Secretary of |
|          | > the Army                                                |
|          | >                                                         |
|          | > • Released within 3 months of EAOS (Expiration of       |
|          | > Active Obligated Service)                               |
|          | >                                                         |
|          | > • Expiration of active duty obligation                  |
|          | >                                                         |
|          | > Consult Central Office (264) to determine if separation |
|          | > was under 10 U.S.C. 1171 if:                            |
|          | >                                                         |
|          | > • Discharge documents indicate applicant served at      |
|          | > least 21 months                                         |
|          | >                                                         |
|          | > AND                                                     |
|          | >                                                         |
|          | > • A narrative reason for separation not included on the |
|          | > above list is indicated (including convenience of the   |
|          | > Government).                                            |
+----------+-----------------------------------------------------------+

+------------+---------------------------------------------------------+
| Specifics  | > If the DD 214, Certificate of Release or Discharge    |
| on         | > from Active Duty, indicates \"Strength Reduction\" or |
| \          | > \"Early Transition,\" it is considered a Reduction in |
| "Reduction | > Force discharge. Reduction in Force discharges are    |
| in Force\" | > presumed to be involuntary, unless there is clear     |
| Exception  | > evidence to the contrary                              |
+------------+---------------------------------------------------------+

+------------+---+--------------+-----------------------------------------+---+
| Specifics  | > |              |                                         |   |
| on         |   |              |                                         |   |
| Hardship   | N |              |                                         |   |
| Exception  | a |              |                                         |   |
|            | r |              |                                         |   |
|            | r |              |                                         |   |
|            | a |              |                                         |   |
|            | t |              |                                         |   |
|            | i |              |                                         |   |
|            | v |              |                                         |   |
|            | e |              |                                         |   |
|            | > |              |                                         |   |
|            |   |              |                                         |   |
|            | r |              |                                         |   |
|            | e |              |                                         |   |
|            | a |              |                                         |   |
|            | s |              |                                         |   |
|            | o |              |                                         |   |
|            | n |              |                                         |   |
|            | s |              |                                         |   |
|            | > |              |                                         |   |
|            |   |              |                                         |   |
|            | f |              |                                         |   |
|            | o |              |                                         |   |
|            | r |              |                                         |   |
|            | > |              |                                         |   |
|            |   |              |                                         |   |
|            | s |              |                                         |   |
|            | e |              |                                         |   |
|            | p |              |                                         |   |
|            | a |              |                                         |   |
|            | r |              |                                         |   |
|            | a |              |                                         |   |
|            | t |              |                                         |   |
|            | i |              |                                         |   |
|            | o |              |                                         |   |
|            | n |              |                                         |   |
|            | > |              |                                         |   |
|            |   |              |                                         |   |
|            | o |              |                                         |   |
|            | n |              |                                         |   |
|            | > |              |                                         |   |
|            |   |              |                                         |   |
|            | d |              |                                         |   |
|            | i |              |                                         |   |
|            | s |              |                                         |   |
|            | c |              |                                         |   |
|            | h |              |                                         |   |
|            | a |              |                                         |   |
|            | r |              |                                         |   |
|            | g |              |                                         |   |
|            | e |              |                                         |   |
|            | > |              |                                         |   |
|            |   |              |                                         |   |
|            | p |              |                                         |   |
|            | a |              |                                         |   |
|            | p |              |                                         |   |
|            | e |              |                                         |   |
|            | r |              |                                         |   |
|            | s |              |                                         |   |
|            | > |              |                                         |   |
|            |   |              |                                         |   |
|            | w |              |                                         |   |
|            | h |              |                                         |   |
|            | i |              |                                         |   |
|            | c |              |                                         |   |
|            | h |              |                                         |   |
|            | > |              |                                         |   |
|            |   |              |                                         |   |
|            | q |              |                                         |   |
|            | u |              |                                         |   |
|            | a |              |                                         |   |
|            | l |              |                                         |   |
|            | i |              |                                         |   |
|            | f |              |                                         |   |
|            | y |              |                                         |   |
|            | > |              |                                         |   |
|            |   |              |                                         |   |
|            | a |              |                                         |   |
|            | s |              |                                         |   |
|            | > |              |                                         |   |
|            |   |              |                                         |   |
|            | \ |              |                                         |   |
|            | " |              |                                         |   |
|            | h |              |                                         |   |
|            | a |              |                                         |   |
|            | r |              |                                         |   |
|            | d |              |                                         |   |
|            | s |              |                                         |   |
|            | h |              |                                         |   |
|            | i |              |                                         |   |
|            | p |              |                                         |   |
|            | \ |              |                                         |   |
|            | " |              |                                         |   |
|            | > |              |                                         |   |
|            |   |              |                                         |   |
|            | a |              |                                         |   |
|            | r |              |                                         |   |
|            | e |              |                                         |   |
|            | > |              |                                         |   |
|            |   |              |                                         |   |
|            | l |              |                                         |   |
|            | i |              |                                         |   |
|            | s |              |                                         |   |
|            | t |              |                                         |   |
|            | e |              |                                         |   |
|            | d |              |                                         |   |
|            | > |              |                                         |   |
|            |   |              |                                         |   |
|            | b |              |                                         |   |
|            | e |              |                                         |   |
|            | l |              |                                         |   |
|            | o |              |                                         |   |
|            | w |              |                                         |   |
|            | > |              |                                         |   |
|            |   |              |                                         |   |
|            | a |              |                                         |   |
|            | c |              |                                         |   |
|            | c |              |                                         |   |
|            | o |              |                                         |   |
|            | r |              |                                         |   |
|            | d |              |                                         |   |
|            | i |              |                                         |   |
|            | n |              |                                         |   |
|            | g |              |                                         |   |
|            | > |              |                                         |   |
|            |   |              |                                         |   |
|            | t |              |                                         |   |
|            | o |              |                                         |   |
|            | > |              |                                         |   |
|            |   |              |                                         |   |
|            | b |              |                                         |   |
|            | r |              |                                         |   |
|            | a |              |                                         |   |
|            | n |              |                                         |   |
|            | c |              |                                         |   |
|            | h |              |                                         |   |
|            | > |              |                                         |   |
|            |   |              |                                         |   |
|            | o |              |                                         |   |
|            | f |              |                                         |   |
|            | > |              |                                         |   |
|            |   |              |                                         |   |
|            | s |              |                                         |   |
|            | e |              |                                         |   |
|            | r |              |                                         |   |
|            | v |              |                                         |   |
|            | i |              |                                         |   |
|            | c |              |                                         |   |
|            | e |              |                                         |   |
|            | . |              |                                         |   |
+------------+---+--------------+-----------------------------------------+---+
|            |   | **Branch of  | **Reason**                              |   |
|            |   | Service**    |                                         |   |
+------------+---+--------------+-----------------------------------------+---+
|            |   | Army         | \"Hardship\" or \"Dependency\"          |   |
+------------+---+--------------+-----------------------------------------+---+
|            |   | Marine Corps | \"Hardship\" or \"Dependency\"          |   |
+------------+---+--------------+-----------------------------------------+---+
|            |   | Air Force    | \"Hardship\"                            |   |
+------------+---+--------------+-----------------------------------------+---+
|            |   | Navy         | \"Hardship\" or \"Demonstrated          |   |
|            |   |              | Dependency\" ([NOTE]{.underline}:       |   |
|            |   |              | Demonstrated Dependency not meeting the |   |
|            |   |              | requirements of BUPERS Manual 3850/240  |   |
|            |   |              | does not qualify)                       |   |
+------------+---+--------------+-----------------------------------------+---+
|            |   | Coast Guard  | \"Hardship\"                            |   |
+------------+---+--------------+-----------------------------------------+---+

2-7

Continued on next page

M26-1, Revised September 16, 1996

2.02 Exceptions to the 2-Year Requirement, Continued

  -----------------------------------------------------------------------
  Specifics on Hardship Exception (continued)

  -----------------------------------------------------------------------

+------------+---------------------------------------------------------+
|            | > Refer case to Central Office (264) for a              |
|            | > determination of whether separation was under 10      |
|            | > U.S.C. 1173 when:                                     |
|            | >                                                       |
|            | > • DD 214 is unclear as to the reason for discharge    |
|            | >                                                       |
|            | > OR                                                    |
|            | >                                                       |
|            | > • Discharge for hardship is alleged but not supported |
|            | > by the discharge documentation                        |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| Pregnancy  | > Discharge for pregnancy does not normally fall under  |
| Discharge  | > any of the exception categories. However, if a branch |
|            | > of the service determines it to be a physical         |
|            | > condition that interferes with an individual\'s       |
|            | > performance of duty, it constitutes an exception to   |
|            | > the 2-Year Requirement.                               |
+------------+---------------------------------------------------------+

2.03 Exception - Selected Reserve Including National Guard and Air
National Guard

+------------+---------------------------------------------------------+
| Selected   | > \"Selected Reserve\" means the Selected Reserve of    |
| Reserve    | > the Ready Reserve of any of the Reserve components    |
| Defined    | > which consists of units and individuals who           |
|            | > participate actively in paid training periods and     |
|            | > serve on paid active duty for training each year.     |
|            | > This includes Army, Navy, Air Force, Marine Corps,    |
|            | > and Coast Guard Reserves as well as Army National     |
|            | > Guard and Air National Guard                          |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| Exception  | > Service in the Ready Reserve, National Guard, or Air  |
|            | > National Guard, under orders to active duty in a      |
|            | > nontraining assignment, qualifies as active duty for  |
|            | > purposes of applying the General Rule for             |
|            | > Eligibility.                                          |
|            | >                                                       |
|            | > Alternatively, for loans closed through 10/28/99, a   |
|            | > veteran can establish eligibility by meeting the      |
|            | > 6-Year Requirement                                    |
+------------+---------------------------------------------------------+

Continued on next page

2-8

September 16, 1996 M26-1, Revised

2.03 Exception - Selected Reserve Including National Guard and Air
National Guard, Continued

  -----------------------------------------------------------------------
  Exception (continued)

  -----------------------------------------------------------------------

+------------+---------------------------------------------------------+
|            | > **[6-Year Requirement:]{.underline}** A veteran who   |
|            | > completes a total of 6 years as a member of the       |
|            | > Selected Reserve (need not be ordered to active duty) |
|            | > is eligible if he or she either:                      |
|            | >                                                       |
|            | > • Received an [honorable discharge]{.underline}       |
|            | >                                                       |
|            | > • Was placed on the [retired list]{.underline}        |
|            | >                                                       |
|            | > • Was [transferred]{.underline} to the Standby        |
|            | > Reserve or an element of the Ready Reserve other than |
|            | > the Selected Reserve after service in the Selected    |
|            | > Reserve characterized as honorable                    |
|            | >                                                       |
|            | > OR                                                    |
|            | >                                                       |
|            | > • [Continues to serve]{.underline} in the Selected    |
|            | > Reserve.                                              |
|            | >                                                       |
|            | > The 6 years service need not be continuous nor in the |
|            | > same Reserve or                                       |
|            | >                                                       |
|            | > National Guard unit. However, [active duty regular    |
|            | > military service cannot be combined with Reserve      |
|            | > service to reach the 6 year minimum]{.underline}.     |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| Example    | > Bill served 12 months of a 2-year enlistment in the   |
|            | > Army. He did not meet the 2-Year Requirement for      |
|            | > eligibility and his separation was not due to any     |
|            | > authorized exceptions. He also served 5 years in the  |
|            | > Selected Reserve. Bill is not eligible. He must serve |
|            | > all 6 years in the Selected Reserve.                  |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| Example    | > A member of the Selected Reserve mobilized during the |
|            | > Persian Gulf War served less than 90 days on active   |
|            | > duty, but continues as a Reserve member. She will be  |
|            | > eligible once the total of her Persian Gulf service   |
|            | > plus additional time spent in the Selected Reserve    |
|            | > totals 6 years.                                       |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| App        | > The exception to the General Rule for Eligibility for |
| licability | > a veteran discharged or released for a                |
| of Other   | > service-connected disability or an unremarried        |
| Exceptions | > surviving spouse of a veteran who died while in       |
|            | > service or from a service-connected disability also   |
|            | > applies to the 6-Year Requirement. However, the       |
|            | > exception for the spouse of a serviceperson missing   |
|            | > in action or prisoner of war is [not]{.underline} an  |
|            | > exception to the 6-Year Requirement.                  |
+------------+---------------------------------------------------------+

Continued on next page

2-9

M26-1, Revised September 16, 1996

2.03 Exception - Selected Reserve Including National Guard and Air
National Guard, Continued

+------------+---------------------------------------------------------+
| Active     | > Periods of active duty for training (ACDUTRA or       |
| Duty for   | > ADTNG) cannot be used to qualify an applicant under   |
| Training   | > the General Rule for Eligibility, but are used to     |
|            | > meet the 6-Year Requirement for Reserve and National  |
|            | > Guard members                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| Active     | > National Guard service is generally considered active |
| Duty for   | > duty for training. However, it can be regular active  |
| National   | > duty, satisfying the General Rule for Eligibility.    |
| Guard      | > Close scrutiny is needed for service designated AGR   |
|            | > (Active Duty Guard/Reserve or Active Guard/Reserve)   |
| *          | > or ADS (Active Duty Service). National Guard service  |
| *Members** | > is to be considered regular active duty if:           |
|            | >                                                       |
|            | > • Performed under the authority of title 10 U.S.C.    |
|            | >                                                       |
|            | > AND                                                   |
|            | >                                                       |
|            | > • No reference to an assignment for training purposes |
|            | > is contained in the documentation.                    |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| Active     | > Active duty pursuant to Executive Order 10957 dated   |
| Duty Under | > 8/10/61 is considered active duty in a nontraining    |
| Executive  | > assignment. The DD 214 denotes separation from active |
| Order      | > duty status, but not from membership in the Reserve   |
| 10957      | > or Guard component                                    |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| Active     | > A reservist who completed at least 90 days active     |
| Duty       | > duty under title 10 during the Persian Gulf War is    |
| during     | > considered to have completed the full period for      |
| Persian    | > which ordered to active duty                          |
| Gulf War   |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| D          | > Except for the Marine Corps, membership in a Reserve  |
| etermining | > component or National Guard begins on the date the    |
| the Date   | > enlistment contract is signed, even if the member     |
| Reserve or | > does not report for training for several months. The  |
| Guard      | > Marine Corps does not consider the person a member of |
| Service    | > its Selected Reserve until he or she begins active    |
| Begins     | > duty training.                                        |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| Character  | > Must be \"Honorable,\" [not]{.underline}              |
| of Service | > \"[General]{.underline},\" discharge to be eligible   |
|            | > under the 6-Year Requirement (unlike the General Rule |
|            | > for Eligibility                                       |
+------------+---------------------------------------------------------+

Continued on next page

2-10

September 16, 1996 M26-1, Revised

2.03 Exception - Selected Reserve Including National Guard and Air
National Guard, Continued

+------------+---------------------------------------------------------+
| A          | > VA Form 26-1880, Request for Determination of         |
| pplication | > Eligibility and Available Loan Guaranty Entitlement   |
| Materials  | >                                                       |
|            | > AND                                                   |
|            | >                                                       |
|            | > Supporting Documentation of 6 years qualifying        |
|            | > service.                                              |
|            | >                                                       |
|            | > Documentation of 6 years service in the Selected      |
|            | > Reserve or Guard varies widely. It must provide       |
|            | > conclusive evidence of 6 years service.               |
|            | >                                                       |
|            | > • Individuals who are still members of the Reserves   |
|            | > or Guard must furnish a statement of service signed   |
|            | > by the adjutant or personnel officer or commander of  |
|            | > his or her unit or higher headquarters.               |
|            | >                                                       |
|            | > • Certain members of the Reserves or Guard who have   |
|            | > completed 20 years service receive a \"20-year        |
|            | > letter\" showing successful completion of 20 years as |
|            | > an active member. This letter along with proof of     |
|            | > honorable discharge is sufficient to support          |
|            | > eligibility.                                          |
|            | >                                                       |
|            | > • Points statements must show points earned through   |
|            | > drills or active duty for training in each year to be |
|            | > counted toward the 6 years. There is no minimum       |
|            | > number of points needed per year. Some statements     |
|            | > only cover one year. In such cases, six statements    |
|            | > would have to be submitted to show the requisite      |
|            | > service.                                              |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
|            | > Documentation of 6 years Reserve/Guard service        |
|            | > includes, but is not limited to, the following:       |
+------------+---------------------------------------------------------+

+-----------+-----------------+-------------------+-------------------+
| **Co      | **Form**        | **When Issued**   | **What to Look    |
| mponent** |                 |                   | For**             |
+-----------+-----------------+-------------------+-------------------+
| Army or   | NGB Form 22,    | Upon Separation   | Item 10a provides |
| Air       | Report of       |                   | information on    |
| National  | Separation and  |                   | service for the   |
| Guard     | Record of       |                   | current period    |
|           | Service         |                   | and item 24       |
|           |                 |                   | indicates         |
|           | (or NGB Form    |                   | character of      |
|           | 23, Retirement  |                   | service           |
|           | Points          |                   |                   |
|           | Accounting)     |                   |                   |
+-----------+-----------------+-------------------+-------------------+

Continued on next page

2-11

M26-1, Revised September 16, 1996

2.03 Exception - Selected Reserve Including National Guard and Air
National Guard, Continued

  -----------------------------------------------------------------------
  Application Materials (continued)

  -----------------------------------------------------------------------

+-----------+-----------------+-------------------+-------------------+
| **Co      | **Form**        | **When Issued**   | **What to Look    |
| mponent** |                 |                   | For**             |
+-----------+-----------------+-------------------+-------------------+
| Army      | DARP Form       | Annually (Plus    | Inactive duty     |
| Reserve   | 249-2-E,        | discharge         | and/or active     |
|           | Chronologi-cal  | certificate when  | duty points       |
|           | Statement of    | obligation        | earned in a       |
|           | Retirement      | completed)        | period qualify    |
|           | Points (or ARPC |                   | that period of    |
|           | Form 606-E)     | (Upon request)    | service           |
+-----------+-----------------+-------------------+-------------------+
| Navy      | NRPC 1070-124,  | Annually (Plus    | Drills and/or     |
| Reserve   | Annual          | discharge         | AT/ADT points     |
|           | Retirement      | certificate when  | earned in a       |
|           | Point Record    | obligation        | period qualify    |
|           |                 | completed)        | that period       |
+-----------+-----------------+-------------------+-------------------+
| Air Force | AF 526, Points  | Annually (Plus    | Active duty for   |
| Reserve   | Summary Record  | discharge         | training and/or   |
|           |                 | certificate when  | inactive duty for |
|           |                 | obligation        | training points   |
|           |                 | completed)        | earned in a       |
|           |                 |                   | period qualify    |
|           |                 |                   | that period       |
+-----------+-----------------+-------------------+-------------------+
| Marine    | NAVMC 798,      | Annually (Plus    | Drills and/or     |
| Corps     | Reserve         | discharge         | active duty       |
| Reserve   | Retirement      | certificate when  | points earned in  |
|           | Credit Report   | obligation        | a period qualify  |
|           |                 | completed)        | that period       |
+-----------+-----------------+-------------------+-------------------+
| Coast     | CG-4175, U.S.   | Annually (Plus    | Drills and/or ADT |
| Guard     | Coast Guard     | discharge         | and AD points     |
| Reserve   | Reserve         | certificate when  | earned in a       |
|           | Retirement      | obligation        | period qualify    |
|           | Points          | completed)        | that period of    |
|           | Statement       |                   | service           |
+-----------+-----------------+-------------------+-------------------+

+------------+---------------------------------------------------------+
|            | > Applicants may obtain supporting documentation by     |
|            | > submitting a completed SF 180, Request Pertaining to  |
|            | > Military Records, to an address indicated on the back |
|            | > of that form                                          |
|            | >                                                       |
|            | > OR                                                    |
+------------+---------------------------------------------------------+

Continued on next page

2-12

September 16, 1996 M26-1, Revised

2.03 Exception - Selected Reserve Including National Guard and Air
National Guard, Continued

  -----------------------------------------------------------------------
  Application Materials (continued)

  -----------------------------------------------------------------------

+------------+---------------------------------------------------------+
|            | > Applicants may call the following numbers for         |
|            | > assistance:                                           |
+------------+---------------------------------------------------------+

+-------------+--------------------------------------------------------+
| **Reserve   | **Telephone Number**                                   |
| Type**      |                                                        |
+-------------+--------------------------------------------------------+
| Army        | 1-800-325-8311 (for assistance in obtaining DARP Form  |
|             | 606)                                                   |
+-------------+--------------------------------------------------------+
| Air Force   | 1-800-525-0102                                         |
+-------------+--------------------------------------------------------+
| Navy        | 1-800-535-2699 extension 1564                          |
+-------------+--------------------------------------------------------+
| Marine      | 1-800-255-5082 (While still fulfilling obligation)     |
| Corps       |                                                        |
|             | 703-784-3622 (After final discharge)                   |
+-------------+--------------------------------------------------------+

+------------+---------------------------------------------------------+
| Consult    | > Consult Central Office (264) when the adequacy of     |
| Central    | > documents submitted to verify service is in question. |
| Office or  |                                                         |
| Not?       |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| Special    | > Issue VA Form 26-8320, Certificate of Eligibility for |
| Procedures | > Loan Guaranty Benefits, to any Reserve or Guard       |
|            | > member who is eligible under the General Rule for     |
|            | > Eligibility. If the applicant is eligible by meeting  |
|            | > the 6-Year Requirement, follow these steps to prepare |
|            | > the COE.                                              |
+------------+---------------------------------------------------------+

+-------+--------------------------------------------------------------+
| **S   | **Action**                                                   |
| tep** |                                                              |
+-------+--------------------------------------------------------------+
| 1     | Use VA Form 26-8320a, Certificate of Eligibility for Loan    |
|       | Guaranty Benefits (Reserves/National Guard)                  |
+-------+--------------------------------------------------------------+
| 2     | Enter entitlement code \"11\"                                |
+-------+--------------------------------------------------------------+
| 3     | Enter branch of service [not]{.underline} as the Reserve or  |
|       | Guard Component, but the same as for non-Reserve service.    |
|       |                                                              |
|       | • [Example]{.underline}: For Army Reserve, enter \"Army\"    |
|       |                                                              |
|       | • [Example]{.underline}: For Air National Guard, enter \"Air |
|       | Force\"                                                      |
+-------+--------------------------------------------------------------+
| 4     | For persons currently serving in the Reserves or Guard,      |
|       | check the block on the certificate which reads, \"Valid      |
|       | unless discharged or released subsequent to date of this     |
|       | certificate. A certification of continuous active duty as of |
|       | date of note is required.                                    |
+-------+--------------------------------------------------------------+

2-13

M26-1, Revised September 16, 1996

2.04 Exception - Veteran Discharged or Released for a Service-Connected
Disability

  ------------ ----------------------------------------------------------
  Exception    A veteran discharged or released from active duty for a
               service-connected disability is eligible, and **no minimum
               length of service requirement applies**.

  ------------ ----------------------------------------------------------

+------------+---------------------------------------------------------+
| Example    | > John served only one day of active duty before being  |
|            | > discharged for a service-connected disability. He is  |
|            | > eligible.                                             |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| A          | > VA Form 26-1880                                       |
| pplication | >                                                       |
| Materials  | > AND                                                   |
|            | >                                                       |
|            | > Official service records showing discharge or release |
|            | > for a service-connected disability                    |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| Refer Case | > Refer case to Adjudication in the office having       |
| to         | > jurisdiction over the claims folder if:               |
| Ad         | >                                                       |
| judication | > • The veteran claims discharge or release for a       |
| or Not?    | > service-connected disability and documentation is     |
|            | > unclear                                               |
|            | >                                                       |
|            | > OR                                                    |
|            | >                                                       |
|            | > • Doubt exists for any other reason.                  |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| What to    | > Use VA Form 3232, General Information Request.        |
| Include in | > Include:                                              |
| Referral   | >                                                       |
|            | > • Question regarding applicability of Op. G.C. 21-62  |
|            | > and 38 CFR 3.315(b).                                  |
|            |                                                         |
|            | ♦ That is, if a veteran was discharged or released for  |
|            | reasons other than a service-connected disability, the  |
|            | veteran may still be regarded as discharged for a       |
|            | service-connected disability if records show a          |
|            | service-connected disability clearly sufficient to      |
|            | warrant discharge or release for a disability incurred  |
|            | in the line of duty.                                    |
|            |                                                         |
|            | > AND                                                   |
|            | >                                                       |
|            | > • Request for Adjudication to include in its reply    |
|            | > the reason for discharge, if not service-connected    |
|            | > disability                                            |
+------------+---------------------------------------------------------+

2-14

September 16, 1996 M26-1, Revised

2.05 Exception - Unremarried Surviving Spouse of Veteran Who Died While
in Service or from a Service-Connected Disability

+------------+---------------------------------------------------------+
| Exception  | > The surviving spouse of a veteran who died in active  |
|            | > service or from a service-connected disability is     |
|            | > eligible [regardless of the length of service of the  |
|            | > deceased veteran]{.underline} as long as:             |
|            | >                                                       |
|            | > • The surviving spouse is not eligible on the basis   |
|            | > of his or her own active duty.                        |
|            | >                                                       |
|            | > **[AND]{.underline}**                                 |
|            | >                                                       |
|            | > **If the veteran died after October 31, 1990**        |
|            | >                                                       |
|            | > • Such [surviving spouse has never been               |
|            | > remarried]{.underline} or lived with another person   |
|            | > and held himself or herself out openly to the public  |
|            | > as that person\'s spouse                              |
|            | >                                                       |
|            | > **OR**                                                |
|            | >                                                       |
|            | > **If the veteran died on or before October 31, 1990** |
|            | >                                                       |
|            | > • Such [surviving spouse was unmarried on October 31, |
|            | > 1990]{.underline}, (or, if married, had filed for     |
|            | > termination of such marriage with a court on or       |
|            | > before October 31, 1990), [and has not                |
|            | > remarried]{.underline} or lived with another person   |
|            | > and held himself or herself out openly to the public  |
|            | > as that person\'s spouse, since October 31, 1990. The |
|            | > fact that one remains a \"spouse\" until termination  |
|            | > of marriage proceedings begun on or before October    |
|            | > 31, 1990, are completed, does not bar eligibility.    |
|            | >                                                       |
|            | > [Note]{.underline}: A remarriage which is void or     |
|            | > annulled by a court is not considered a remarriage;   |
|            | > i.e., does not make the surviving spouse ineligible.  |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| Example    | > Jane, the surviving spouse of a veteran who died in   |
|            | > active service during the Vietnam era was remarried   |
|            | > in 1980, then divorced in 1985. She is eligible, and  |
|            | > remains so unless she remarries.                      |
+------------+---------------------------------------------------------+

Continued on next page

2-15

M26-1, Revised September 16, 1996

2.05 Exception - Unremarried Surviving Spouse of Veteran Who Died While
in Service or from a Service-Connected Disability, Continued

+------------+---------------------------------------------------------+
| E          | > The entitlement of the surviving spouse is            |
| ntitlement | > independent from that of the deceased veteran.        |
|            | > Therefore, [the surviving spouse receives full        |
|            | > entitlement]{.underline}, if eligible, regardless of: |
|            | >                                                       |
|            | > • Any prior use of entitlement by the deceased        |
|            | > veteran which has not been restored                   |
|            | >                                                       |
|            | > OR                                                    |
|            | >                                                       |
|            | > • The surviving spouse\'s ownership of real property  |
|            | > purchased by the deceased veteran using his or her    |
|            | > entitlement                                           |
|            | >                                                       |
|            | > OR                                                    |
|            | >                                                       |
|            | > • Payment of a claim or existence of an uncured       |
|            | > default on a loan obtained by the deceased veteran.   |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| A          | > VA Form 26-1817, Request for Determination of Loan    |
| pplication | > Guaranty Eligibility- Unremarried Surviving Spouses   |
| Materials  |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| Special    | > Follow these steps to determine eligibility, and, if  |
| Procedures | > eligible, to issue the COE.                           |
+------------+---------------------------------------------------------+

+-------+--------------------------------------------------------------+
| **S   | **Action**                                                   |
| tep** |                                                              |
+-------+--------------------------------------------------------------+
| 1     | > Upon receipt of VA Form 26-1817:                           |
|       | >                                                            |
|       | > • Review for general completeness                          |
|       | >                                                            |
|       | > • Attach a printout of the BINQ screen showing the claim   |
|       | > folder location                                            |
|       | >                                                            |
|       | > • Complete part II, section A, of VA Form 26-1817          |
|       | >                                                            |
|       | > • Forward to the Adjudication office with jurisdiction     |
|       | > over the claims folder.                                    |
+-------+--------------------------------------------------------------+
| 2     | > Adjudication will complete part II, section B, of the form |
|       | > and return it to the originating station.                  |
+-------+--------------------------------------------------------------+
| 3     | Review the Adjudication determination. If eligible, proceed  |
|       | to step 4                                                    |
+-------+--------------------------------------------------------------+

Continued on next page

2-16

September 16, 1996 M26-1, Revised

2.05 Exception - Unremarried Surviving Spouse of Veteran Who Died While
in Service or from a Service-Connected Disability, Continued

  -----------------------------------------------------------------------
  Special Procedures (continued)

  -----------------------------------------------------------------------

+-------+--------------------------------------------------------------+
| **S   | **Action**                                                   |
| tep** |                                                              |
+-------+--------------------------------------------------------------+
| 4     | Issue the COE as follows:                                    |
|       |                                                              |
|       | • Type or stamp \"Unremarried Surviving Spouse\" on the top  |
|       |                                                              |
|       | • For \"Name of Veteran,\" enter the surviving spouse\'s     |
|       | name.                                                        |
|       |                                                              |
|       | • Enter the XC-file number in the \"Service-serial number\"  |
|       | space and use that number in all records and correspondence  |
|       | in lieu of a service-serial number.                          |
|       |                                                              |
|       | • Leave the \"Branch of service\" space blank.               |
|       |                                                              |
|       | • For \"Date of Birth,\" enter the spouse\'s birthdate, not  |
|       | the veteran\'s.                                              |
|       |                                                              |
|       | • Stamp \"Eligibility of the surviving spouse and the        |
|       | validity of guaranty entitlement hereby evidenced will be    |
|       | null and void if any change in marital status occurs         |
|       | subsequent to the date of this certificate and prior to the  |
|       | date a loan to the widow or widower is closed, unless the    |
|       | lender making the loan was not aware of any change in        |
|       | marital status and obtained on the date the loan closed an   |
|       | affidavit from the surviving spouse in the form prescribed   |
|       | by the Secretary\" on the lower left portion of the face of  |
|       | the certificate.                                             |
|       |                                                              |
|       | • Enter the date of the certification by Adjudication in the |
|       | \"Date Issued\" space.                                       |
|       |                                                              |
|       | • Send the COE to the surviving spouse using FL 26-287.      |
+-------+--------------------------------------------------------------+

2.06 Exception - Spouse of Serviceperson Missing In Action or Prisoner
of War

+------------+---------------------------------------------------------+
| Exception  | > The spouse of a serviceperson who is listed for more  |
|            | > than 90 days as missing in action (MIA) or a prisoner |
|            | > of war (POW) is eligible as long as the serviceperson |
|            | > remains in such status and the spouse remains married |
|            | > to the serviceperson.                                 |
|            | >                                                       |
|            | > • For purposes of this exception, MIA/POW includes a  |
|            | > serviceperson captured in the line of duty by a       |
|            | > hostile force or forcibly detained or                 |
+------------+---------------------------------------------------------+

Continued on next page

2-17

M26-1, Revised September 16, 1996

2.06 Exception - Spouse of Serviceperson Missing In Action or Prisoner
of War, Continued

  -----------------------------------------------------------------------
  Exception (continued)

  -----------------------------------------------------------------------

+------------+---------------------------------------------------------+
|            | > interned in the line of duty by a foreign government  |
|            | > or power.                                             |
|            | >                                                       |
|            | > **The spouse is limited to one home loan**.           |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| E          | > The entitlement of the spouse is independent from     |
| ntitlement | > that of the serviceperson. Therefore, the spouse\'s   |
|            | > entitlement is not reduced by any prior use of        |
|            | > entitlement by the serviceperson, and the             |
|            | > serviceperson\'s entitlement is not reduced by any    |
|            | > use of entitlement by the spouse.                     |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| A          | > Letter from the applicant stating he or she is        |
| pplication | > seeking determination of eligibility for loan         |
| Materials  | > benefits, accompanied by:                             |
|            | >                                                       |
|            | > • A copy of the most recent DD Form 1300, Report of   |
|            | > Casualty, in the applicant\'s possession              |
|            | >                                                       |
|            | > • Marriage certificate (or other proof of marriage    |
|            | > customary in jurisdiction where marriage occurred)    |
|            | >                                                       |
|            | > AND                                                   |
|            | >                                                       |
|            | > • Complete information on [all]{.underline} marriages |
|            | > previously entered into by the applicant and by the   |
|            | > serviceperson, and the manner of termination (death,  |
|            | > divorce, annulment, etc.) of all prior marriages of   |
|            | > each, including the date and place of such            |
|            | > termination.                                          |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| Special    | > Follow these steps to determine eligibility, and, if  |
| Procedures | > eligible, to issue the COE.                           |
+------------+---------------------------------------------------------+

+-------+--------------------------------------------------------------+
| **S   | **Action**                                                   |
| tep** |                                                              |
+-------+--------------------------------------------------------------+
| 1     | Make and retain a copy of the application and supporting     |
|       | documents.                                                   |
+-------+--------------------------------------------------------------+
| 2     | Forward the original application and supporting documents to |
|       | Adjudication with VA Form 3232 or a memorandum requesting a  |
|       | determination of basic eligibility.                          |
|       |                                                              |
|       | • Adjudication will obtain any additional information        |
|       | required, and provide a determination by memorandum giving   |
|       | reason(s) for any adverse determination.                     |
+-------+--------------------------------------------------------------+

Continued on next page

2-18

September 16, 1996 M26-1, Revised

2.06 Exception - Spouse of Serviceperson Missing In Action or Prisoner
of War, Continued

  -----------------------------------------------------------------------
  Special Procedures (continued)

  -----------------------------------------------------------------------

+-------+--------------------------------------------------------------+
| **S   | **Action**                                                   |
| tep** |                                                              |
+-------+--------------------------------------------------------------+
| 3     | Review the Adjudication determination.                       |
+-------+--------------------------------------------------------------+
| 4     | Obtain the prior approval of Central Office (264) in the     |
|       | case of any adverse determination before notifying the       |
|       | applicant.                                                   |
+-------+--------------------------------------------------------------+
| 5     | If eligible, issue the COE.                                  |
|       |                                                              |
|       | • The COE must contain the notation: \"This certificate      |
|       | evidences eligibility under 38 U.S.C. 3701(b)(3) of the      |
|       | individual named as the spouse of a serviceman or            |
|       | servicewoman missing in action or prisoner of war. Any       |
|       | unused entitlement will terminate automatically upon the     |
|       | receipt of official notice that the serviceman or            |
|       | servicewoman is no longer in a category specified in 38      |
|       | U.S.C. 3701(b)(3) or upon dissolution of marriage.\"         |
|       |                                                              |
|       | • Block out all but one space for indicating available       |
|       | entitlement since the spouse is entitled to only one home    |
|       | loan.                                                        |
|       |                                                              |
|       | • Stamp \"POW/MIA\" on the upper right front of the          |
|       | certificate.                                                 |
|       |                                                              |
|       | • Stamp any files containing loan applications from the      |
|       | spouse with \"POW/MIA\" on the tab strip showing the loan    |
|       | number.                                                      |
+-------+--------------------------------------------------------------+

2.07 Exception - Service with Allied Countries in World War II

+------------+---------------------------------------------------------+
| Exception  | > A veteran who served in the active military or naval  |
|            | > service of a government allied with the United States |
|            | > in World War II under conditions other than           |
|            | > dishonorable is eligible if he or she meets           |
|            | > **[all]{.underline}** of the following conditions:    |
|            | >                                                       |
|            | > • The applicant served [90 days or more]{.underline}, |
|            | > any part of which occurred during World War II, or by |
|            | > reason of injury or disability incurred in service in |
|            | > line of duty served less than 90 days. **AND**        |
|            | >                                                       |
|            | > • The applicant\'s service was at a time when the     |
|            | > allied government was [at war]{.underline} with the   |
|            | > common enemy. **AND**                                 |
|            | >                                                       |
|            | > • At the time of entrance into such active service,   |
|            | > the applicant was a [citizen]{.underline} of the      |
|            | > United States. **AND**                                |
+------------+---------------------------------------------------------+

Continued on next page

2-19

M26-1, Revised September 16, 1996

2.07 Exception - Service with Allied Countries in World War II,
Continued

  -----------------------------------------------------------------------
  Exception (continued)

  -----------------------------------------------------------------------

+------------+---------------------------------------------------------+
|            | > • The applicant is a [resident]{.underline} (not      |
|            | > required to be a citizen) of the United States when   |
|            | > application is made. **AND**                          |
|            | >                                                       |
|            | > • The applicant [has not applied for or               |
|            | > received]{.underline} the same or similar             |
|            | > [benefits]{.underline} from the government in whose   |
|            | > forces he or she served.                              |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| Qualifying | > United Kingdom of Great Britain and Northern Ireland  |
| Allied     | >                                                       |
| Countries  | > Australia                                             |
|            | >                                                       |
|            | > New Zealand                                           |
|            | >                                                       |
|            | > Canada                                                |
|            | >                                                       |
|            | > India                                                 |
|            | >                                                       |
|            | > Union of South Africa                                 |
|            | >                                                       |
|            | > China                                                 |
|            | >                                                       |
|            | > France                                                |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| A          | > VA Form 26-1880                                       |
| pplication | >                                                       |
| Materials  | > Original Discharge or other release documents         |
|            | >                                                       |
|            | > **AND**                                               |
|            | >                                                       |
|            | > Affidavit showing that applicant:                     |
|            | >                                                       |
|            | > • Was a citizen of the United States at the time of   |
|            | > entrance into the qualifying active service           |
|            | >                                                       |
|            | > • Is a resident of the United States at the time of   |
|            | > application                                           |
|            | >                                                       |
|            | > [AND]{.underline}                                     |
|            | >                                                       |
|            | > • Has not applied for or received the same or similar |
|            | > benefit from the government on whose forces he or she |
|            | > served, or stating what, if any, such benefits have   |
|            | > been received.                                        |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| Refer Case | > Refer the case to Central Office (264) for            |
| to Central | > determination if any of the following conditions      |
| Office or  | > exist:                                                |
| Not?       | >                                                       |
|            | > • Doubt as to eligibility **OR**                      |
|            | >                                                       |
|            | > • Service was less than 90 days with a discharge due  |
|            | > to injury or disability **OR**                        |
|            | >                                                       |
|            | > • The applicant served in the armed forces of a       |
|            | > government not listed as a Qualifying Allied Country  |
|            | > **OR**                                                |
+------------+---------------------------------------------------------+

2-20 Continued on next page

September 16, 1996 M26-1, Revised

2.07 Exception - Service with Allied Countries in World War II,
Continued

  -----------------------------------------------------------------------
  Refer Case to Central Office or Not? (continued)

  -----------------------------------------------------------------------

+------------+---------------------------------------------------------+
|            | > • It appears the applicant has applied for or         |
|            | > received the same or similar benefits from the        |
|            | > government in whose forces he or she served.          |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| What to    | > All application materials                             |
| Include in | >                                                       |
| Referral   | > AND                                                   |
|            | >                                                       |
|            | > A complete statement of facts when the applicant      |
|            | > believes he or she may be eligible despite benefits   |
|            | > received from another government.                     |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| Specifics  | > Types of acceptable active service:                   |
| on Service | >                                                       |
| in the     | > • Canadian Army - including Canadian Women\'s Army    |
| Canadian   | > Corps                                                 |
| Armed      | >                                                       |
| Forces     | > • Royal Canadian Air Force - including Women\'s       |
|            | > Division of the Royal Canadian Air Force              |
|            | >                                                       |
|            | > • Royal Canadian Navy - including Royal Canadian      |
|            | > Naval Reserve, Royal Canadian Naval Volunteer         |
|            | > Reserve, and Women\'s Royal Canadian Naval Service    |
|            | >                                                       |
|            | > NOTE: Nurses have the same status as commissioned     |
|            | > officers in the above services.                       |
|            | >                                                       |
|            | > Payment of a war service gratuity and a               |
|            | > re-establishment credit to discharged personnel under |
|            | > the Canadian War Service Grants Act of 1944 are not   |
|            | > considered similar to VA loan benefits, and thus are  |
|            | > not a bar to eligibility.                             |
|            | >                                                       |
|            | > All discharges are considered issued under conditions |
|            | > other than dishonorable except those described in the |
|            | > following chart. Any type of discharge described in   |
|            | > this chart bars eligibility.                          |
+------------+---------------------------------------------------------+

Continued on next page

2-21

M26-1, Revised September 16, 1996

2.07 Exception - Service with Allied Countries in World War II,
Continued

+------------+---+-------+-------------+--------+-----------------------+---+
| Specifics  |   |       |             |        |                       |   |
| on Service |   |       |             |        |                       |   |
| in the     |   |       |             |        |                       |   |
| Canadian   |   |       |             |        |                       |   |
| Armed      |   |       |             |        |                       |   |
| Forces     |   |       |             |        |                       |   |
| (          |   |       |             |        |                       |   |
| continued) |   |       |             |        |                       |   |
|            |   |       |             |        |                       |   |
| Un         |   |       |             |        |                       |   |
| acceptable |   |       |             |        |                       |   |
| types of   |   |       |             |        |                       |   |
| D          |   |       |             |        |                       |   |
| ischarges: |   |       |             |        |                       |   |
+------------+---+-------+-------------+--------+-----------------------+---+
|            |   | *     | **          | *      | **Reason for          |   |
|            |   | *Serv | Authority** | *Refer | Discharge**           |   |
|            |   | ice** |             | ence** |                       |   |
+------------+---+-------+-------------+--------+-----------------------+---+
|            |   | Royal | Routing     | 1      | Convicted by a civil  |   |
|            |   | Can   | Order       | 029(7) | power during service  |   |
|            |   | adian |             |        |                       |   |
|            |   | Army  |             | 1      | Misconduct            |   |
|            |   |       |             | 029(8) |                       |   |
|            |   |       |             |        | Sentenced to be       |   |
|            |   |       |             | 1      | discharged with       |   |
|            |   |       |             | 029(9) | ignominy              |   |
+------------+---+-------+-------------+--------+-----------------------+---+
|            |   | Royal | King\'s     | A      | Misconduct            |   |
|            |   | Can   | Regulations | rticle |                       |   |
|            |   | adian | Royal       |        | Dismissal with or     |   |
|            |   | Navy  | Canadian    | 7.80   | without disgrace      |   |
|            |   |       | Navy        |        |                       |   |
|            |   |       | (K.         | 14.14  |                       |   |
|            |   |       | R.)(R.C.N.) |        |                       |   |
+------------+---+-------+-------------+--------+-----------------------+---+
|            |   | Royal | King\'s     | Par    | Misconduct            |   |
|            |   | Can   | Regulations | agraph |                       |   |
|            |   | adian |             |        | Convicted by a civil  |   |
|            |   | Air   | (Air K.R.)  | 150(a) | power                 |   |
|            |   | Force | (Air)       |        |                       |   |
|            |   |       |             | 150(b) |                       |   |
+------------+---+-------+-------------+--------+-----------------------+---+
|            | > |       |             |        |                       |   |
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|            | t |       |             |        |                       |   |
|            | > |       |             |        |                       |   |
|            |   |       |             |        |                       |   |
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|            | d |       |             |        |                       |   |
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|            | n |       |             |        |                       |   |
|            | t |       |             |        |                       |   |
|            | i |       |             |        |                       |   |
|            | f |       |             |        |                       |   |
|            | y |       |             |        |                       |   |
|            | i |       |             |        |                       |   |
|            | n |       |             |        |                       |   |
|            | g |       |             |        |                       |   |
|            | > |       |             |        |                       |   |
|            |   |       |             |        |                       |   |
|            | i |       |             |        |                       |   |
|            | n |       |             |        |                       |   |
|            | f |       |             |        |                       |   |
|            | o |       |             |        |                       |   |
|            | r |       |             |        |                       |   |
|            | m |       |             |        |                       |   |
|            | a |       |             |        |                       |   |
|            | t |       |             |        |                       |   |
|            | i |       |             |        |                       |   |
|            | o |       |             |        |                       |   |
|            | n |       |             |        |                       |   |
|            | . |       |             |        |                       |   |
+------------+---+-------+-------------+--------+-----------------------+---+

2-22

September 16, 1996 M26-1, Revised

2.08 Exception - Other Types of Qualifying Service During World War II
and/or Later

+------------+---------------------------------------------------------+
| Exception  | > Service in the following organizations, services,     |
| for        | > programs and schools qualifies as active duty for     |
| Service    | > purposes of applying the General Rule for             |
| During     | > Eligibility, subject to any conditions or dates       |
| World War  | > specified.                                            |
| II         |                                                         |
+------------+---------------------------------------------------------+

+-------------------------+--------------------------------------------+
| **Type of Service**     | **Qualifying Dates/Conditions, if any**    |
+-------------------------+--------------------------------------------+
| Women\'s Army Corps,    | From date of commission or enlistment, on  |
| WAAC (Women\'s Army     | or after 7/1/43, if the Secretary of the   |
| Auxiliary Corps), WASP  | service determines it is active military   |
| (Women\'s Air Force     | service. Service in the Women\'s Army      |
| Service Pilots) and     | Corps, WAAC, WASP, and as an Engineer      |
| similar service         | Field Clerk is certified as active         |
|                         | military service. Discharge other than     |
|                         | honorable or general discharge bars        |
|                         | eligibility. WASP members lacking DD 214   |
|                         | may send SF 180, Request Pertaining to     |
|                         | Military Records, to:                      |
|                         |                                            |
|                         | • HQAFMPC/MPCDOA1 Randolph Air Force Base, |
|                         | TX 78148                                   |
+-------------------------+--------------------------------------------+
| Women\'s Reserve of the | From date of commission or enlistment, on  |
| Navy or Marine Corps    | or after 7/30/42                           |
+-------------------------+--------------------------------------------+
| Women\'s Reserve of the | From date of commission or enlistment, on  |
| Coast Guard             | or after 11/23/42                          |
+-------------------------+--------------------------------------------+
| Army Nurse Corps        | While employed in active service under the |
| (female)                | Department of the Army or the Air Force,   |
|                         | or civilian employees who served in        |
|                         | defense of Bataan and Corregidor from      |
|                         | 1/2/42 to 2/3/45                           |
+-------------------------+--------------------------------------------+
| Navy Nurse Corps        | While employed in active service under the |
| (female)                | Department of the Navy                     |
+-------------------------+--------------------------------------------+
| Dietetic and Physical   | Appointed with relative rank on or after   |
| Therapy personnel       | 12/22/42 or commissioned on or after       |
| (female)                | 6/22/44. Does not include students and     |
|                         | apprentices.                               |
+-------------------------+--------------------------------------------+
| Commissioned officers   | While assigned during World War II to      |
| of the Coast and        | duty:                                      |
| Geodetic Survey         |                                            |
|                         | • On projects for the Army, Navy, or Air   |
|                         | Force in areas outside the continental     |
|                         | U.S. or in Alaska                          |
|                         |                                            |
|                         | OR                                         |
|                         |                                            |
|                         | • In coastal areas of the U.S. determined  |
|                         | by the Army, Navy, or Air Force to be of   |
|                         | immediate hazard.                          |
+-------------------------+--------------------------------------------+

Continued on next page 2-23

M26-1, Revised September 16, 1996

2.08 Exception - Other Types of Qualifying Service During World War II
and/or Later, Continued

  -----------------------------------------------------------------------
  Exception for Service During World War II (continued)

  -----------------------------------------------------------------------

+-------------------------+--------------------------------------------+
| **Type of Service**     | **Qualifying Dates/Conditions, if any**    |
+-------------------------+--------------------------------------------+
| Commissioned officers   | Who served on full-time duty on or after   |
| of the Coast and        | 7/29/45                                    |
| Geodetic Survey, ESSA   |                                            |
| (Environmental Science  |                                            |
| Services                |                                            |
| Administration) and     |                                            |
| their successor agency, |                                            |
| NOAA (National Oceanic  |                                            |
| and Atmospheric         |                                            |
| Administration)         |                                            |
+-------------------------+--------------------------------------------+
| Civilian crewmen of the | Who served on one or more of these vessels |
| USCGS (U.S. Coast Guard |                                            |
| and Geodetic Survey)    | while conducting cooperative operations    |
| vessels: Derickson,     | with and for the U.S. Armed Forces either: |
| Explorer, Gilbert,      |                                            |
| Hilgard, E. Lester      | • In Atlantic areas outside U.S. inland    |
| Jones, Lydonia ,        | waters (including Atlantic and Gulf of     |
| Patton, Surveyor,       | Mexico coastal waters) from 12/7/41        |
| Wainwright, or Westdahl | through 5/8/45                             |
|                         |                                            |
|                         | OR                                         |
|                         |                                            |
|                         | • In Pacific areas outside of U.S. inland  |
|                         | waters (including Pacific coastal and      |
|                         | Alaskan coastal waters) from 12/7/41       |
|                         | through 8/14/45                            |
+-------------------------+--------------------------------------------+
| Merchant Marine seamen  | Who served in active oceangoing service    |
|                         | from 12/7/41 to 8/15/45                    |
+-------------------------+--------------------------------------------+
| Civil service           | In oceangoing service.                     |
| crewmembers aboard U.S. |                                            |
| Army Transport Service  |                                            |
| and Naval               |                                            |
| Transportation Service  |                                            |
| vessels                 |                                            |
+-------------------------+--------------------------------------------+

Continued on next page

2-24

September 16, 1996 M26-1, Revised

2.08 Exception - Other Types of Qualifying Service During World War II
and/or Later, Continued

  -----------------------------------------------------------------------
  Exception for Service During World War II (continued)

  -----------------------------------------------------------------------

+---------------------------+------------------------------------------+
| **Type of Service**       | **Qualifying Dates/Conditions, if any**  |
+---------------------------+------------------------------------------+
| Civilian Navy IFF         | Who served in the Combat Areas of the    |
| (Identification Friend or | Pacific between 12/7/41 and 8/15/45      |
| Foe) Technicians          | aboard a U.S. Navy vessel deployed in    |
|                           | the Pacific Ocean beyond the continental |
|                           | limits of the U.S.                       |
|                           |                                          |
|                           | AND                                      |
|                           |                                          |
|                           | Were employed by the Hazeltine           |
|                           | Electronics Corp. under a valid contract |
|                           | with the U.S. Navy                       |
+---------------------------+------------------------------------------+
| United States Merchant    | Who served on blockships in support of   |
| Seamen                    | Operation Mulberry                       |
+---------------------------+------------------------------------------+
| U.S. civilian employees   | Who served overseas as a result of       |
| of American Airlines      | American Airlines\' contract with the    |
|                           | Air Transport Command between 12/7/41    |
|                           | and 8/14/45                              |
+---------------------------+------------------------------------------+
| U.S. Civilian Flight Crew | Who served overseas as a result of       |
| and Aviation Ground       | United\'s contract with the Air          |
| Support Employees of      | Transport Command between 12/7/41 and    |
| United Airlines           | 8/14/45                                  |
+---------------------------+------------------------------------------+
| U.S. Civilian Flight Crew | Who served overseas as a result of a     |
| and Aviation Ground       | contract with the Air Transport Command  |
| Support Employees of      | between 12/7/41 and 8/14/45              |
| Consolidated Vultee       |                                          |
| Aircraft Corp.            |                                          |
| (Consairway Division)     |                                          |
+---------------------------+------------------------------------------+
| U.S. Civilian Flight Crew | Who served overseas as a result of Pan   |
| and Aviation Ground       | American\'s contract with the Air        |
| Support Employees of Pan  | Transport Command and Naval Air          |
| American World Airways    | Transport Service between 12/7/41 and    |
| and its subsidiaries and  | 8/14/45                                  |
| affiliates                |                                          |
+---------------------------+------------------------------------------+
| U.S. Civilian Flight Crew | Who served overseas as a result of a     |
| and Aviation Ground       | contract with the Air Transport Command  |
| Support Employees of      | between 12/7/41 and 8/14/45              |
| Eastern Airlines-Military |                                          |
| Transport Division        |                                          |
+---------------------------+------------------------------------------+

Continued on next page

2-25

M26-1, Revised September 16, 1996

2.08 Exception - Other Types of Qualifying Service During World War II
and/or Later, Continued

  -----------------------------------------------------------------------
  Exception for Service During World War II (continued)

  -----------------------------------------------------------------------

  -------------------------- --------------------------------------------
  **Type of Service**        **Qualifying Dates/Conditions, if any**

  U.S. Civilian Flight Crew  Who served overseas as a result of a
  and Aviation Ground        contract with the Air Transport Command
  Support Employees of       between 12/7/41 and 8/14/45
  Northwest Airlines         

  Officers or enlisted       Ordered to active duty by the Army, Navy, or
  personnel on retired list  Air Force subsequent to being placed on the
                             retired list

  U.S. civilians of the      Who served overseas under U.S. Armies and
  American Field Service     U.S. Army Groups between 12/7/41 and 5/8/45

  Members of the American    Who served honorably in China between
  Volunteer Group (Flying    12/7/41 and 7/18/42 and provide honorable
  Tigers)                    discharge document or letter, or
                             identification as honorably discharged in
                             credible publication or document

  Members of the American    Between 6/21/42 and 3/31/43. Must have been
  Volunteer Guard, Eritrea   honorably discharged.
  Service Command            

  Members of \"the Civilian  
  Personnel Assigned to the  
  Secret Intelligence        
  Element of the OSS\"       

  Members of the \"Guam      
  Combat Patrol\"            

  Members of the \"old\"     Enlistment under section 14 of the Armed
  Philippine Scouts (a       Forces Voluntary Recruitment Act of 1945,
  component of the U.S.      Public Law 190, which created the \"new\"
  Armed Forces               Philippine Scouts does not qualify. Service
                             in the Philippine Commonwealth Army,
                             including the recognized guerrillas, does
                             not qualify.
  -------------------------- --------------------------------------------

Continued on next page

2-26

September 16, 1996 M26-1, Revised

2.08 Exception - Other Types of Qualifying Service During World War II
and/or Later, Continued

+------------+---------------------------------------------------------+
| Exception  | > Service in the following organizations, services,     |
| for        | > programs and schools qualifies as active duty for     |
| Service    | > purposes of applying the General Rule for             |
| During     | > Eligibility, subject to any conditions or dates       |
| World War  | > specified.                                            |
| II and/or  |                                                         |
| Later      |                                                         |
+------------+---------------------------------------------------------+

+--------------------------+-------------------------------------------+
| **Type of Service**      | **Qualifying Dates/Conditions, if any**   |
+--------------------------+-------------------------------------------+
| Members of the Army      | Does not include members of the Army      |
| Specialized Training     | Specialized Training Program Reserve      |
| Program or Navy College  |                                           |
| Training Program         |                                           |
+--------------------------+-------------------------------------------+
| Cadets of the U.S.       |                                           |
| Military Academy, U.S.   |                                           |
| Coast Guard Academy, and |                                           |
| Air Force Academy, and   |                                           |
| midshipmen of the U.S.   |                                           |
| Naval Academy            |                                           |
+--------------------------+-------------------------------------------+
| Commissioned Officers of | Who are detailed with the Army, Navy, or  |
| the Public Health        | Coast Guard                               |
| Service Regular and      |                                           |
| Reserve on or after      | OR                                        |
| 11/11/43                 |                                           |
|                          | Served in time of war outside the         |
|                          | continental limits of the U.S. or Alaska  |
|                          |                                           |
|                          | OR                                        |
|                          |                                           |
|                          | Served in Commissioned Corp. of the       |
|                          | Public Health Service between 7/29/45 and |
|                          | 7/3/52                                    |
|                          |                                           |
|                          | OR                                        |
|                          |                                           |
|                          | Served full-time after 1/31/55.           |
+--------------------------+-------------------------------------------+

+------------+---------------------------------------------------------+
| Specifics  | > All such officers were separated from active duty on  |
| on         | > 7/3/52 unless they were detailed with the U.S.        |
| Co         | > military.                                             |
| mmissioned | >                                                       |
| Officers   | > • DD 214 or other evidence of separation on 7/3/52    |
| of the     | > will indicate the authority for separation as         |
| Public     | > Executive Orders 9575 and 10367 and Public Law        |
| Health     | > 82-313.                                               |
| Service    | >                                                       |
|            | > • Those on detail with the U.S. military on 7/3/52    |
|            | > were released from active duty at the expiration of   |
|            | > their detail period.                                  |
+------------+---------------------------------------------------------+

Continued on next page

2-27

M26-1, Revised September 16, 1996

2.08 Exception - Other Types of Qualifying Service During World War II
and/or Later, Continued

  -----------------------------------------------------------------------
  Specifics on Commissioned Officers of the Public Health Service
  (continued)

  -----------------------------------------------------------------------

+------------+---------------------------------------------------------+
|            | > For service after 1/31/55, documentation of active    |
|            | > duty consists of PHS                                  |
|            | >                                                       |
|            | > Form 1867, Statement of Service-Verification of       |
|            | > Status of Commissioned                                |
|            | >                                                       |
|            | > Officers of the U.S. Public Health Service, which is  |
|            | > issued only at or after                               |
|            | >                                                       |
|            | > the time of discharge or release from active duty.    |
|            | >                                                       |
|            | > • Commissioned officers still on active duty must     |
|            | > provide documentation of such, signed by or at the    |
|            | > direction of the adjutant or personnel officer or     |
|            | > commanding officer of the unit or higher              |
|            | > headquarters.                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| App        | > The exceptions for a veteran discharged or released   |
| licability | > for a service-connected disability, an unremarried    |
| of Other   | > surviving spouse of a veteran who died while in       |
| Exceptions | > service or from a service-connected disability, a     |
|            | > spouse of a serviceperson missing in action or        |
|            | > prisoner of war or exceptions to the 2 year           |
|            | > requirement apply to eligibility through these other  |
|            | > types of qualifying service.                          |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| Refer Case | > Refer case to Central Office (264) for determination  |
| to Central | > if any of the following conditions exist:             |
| Office or  | >                                                       |
| Not?       | > • Type of service is difficult to categorize          |
|            | >                                                       |
|            | > • Service does not fall under one of the              |
|            | > organizations listed                                  |
|            | >                                                       |
|            | > • Doubt exists as to eligibility                      |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| What to    | > All application materials and supporting              |
| Include in | > documentation including any records of telephone      |
| Referral   | > contacts with the applicant to clarify VA Form        |
|            | > 26-1880 data.                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| Assistance | > The Veterans Service Division will assist veterans in |
| with       | > obtaining documentation to establish their            |
| Doc        | > eligibility.                                          |
| umentation |                                                         |
+------------+---------------------------------------------------------+

2-28

September 16, 1996 M26-1, Revised

2.09 Rules for Calculating Length of Active Duty Service

+-----------+----------------------------------------------------------+
| Purpose   | > The General Rule for Eligibility requires active       |
|           | > service of 90 days, 181 continuous days, or 24         |
|           | > continuous months, depending on applicant\'s           |
|           | > circumstances. This section contains the rules and     |
|           | > procedures necessary for determining the length of an  |
|           | > applicant\'s active duty service.                      |
+-----------+----------------------------------------------------------+

+-----------+----------------------------------------------------------+
| P         | > The following steps are used to calculate the length   |
| rocedures | > of a veteran\'s active duty service. Rules for         |
| for       | > analyzing lost time, travel time, whether time is      |
| Ca        | > qualifying or not, and whether tacking applies can be  |
| lculating | > found under appropriate headings following this chart. |
| Length of |                                                          |
| Active    |                                                          |
| Service   |                                                          |
+-----------+----------------------------------------------------------+

  ---------- ---------------------------------------------------------------
  **Step**   **Action**

  1          Identify period(s) of active service by comparing the entry
             date onto active duty with the separation date

  2          If the veteran has more than one period of active service, add
             the periods together if necessary to establish eligibility and
             permitted under the tacking rule

  3          Evaluate reasons for any lost time

  4          Deduct nonqualifying lost time

  5          Deduct other nonqualifying types of time

  6          If necessary to establish eligibility, obtain certification of
             travel time

  7          Add certified travel time
  ---------- ---------------------------------------------------------------

+-----------+----------------------------------------------------------+
| Tacking   | > Two or more periods of active service, any part of     |
| Rule      | > which occurred during wartime, under conditions other  |
|           | > than dishonorable, may be added together to total the  |
|           | > 90 days active service required during wartime.        |
|           | >                                                        |
|           | > [Tacking may not be used to establish eligibility      |
|           | > under the 181 continuous days during peacetime         |
|           | > requirement or the 24 continuous months requirement    |
|           | > because separate periods would not be considered       |
|           | > continuous]{.underline}.                               |
+-----------+----------------------------------------------------------+

+-----------+----------------------------------------------------------+
| Example   | > In 1992, Karen\'s reserve unit was ordered to active   |
|           | > duty in the Persian Gulf. She served 75 days. In 1995, |
|           | > Karen was ordered to active duty, sent to the Republic |
|           | > of Haiti in support of Operation Uphold/Maintain       |
|           | > Democracy. She served 45 days. Karen is eligible for a |
|           | > regular COE because she completed 90 days of active    |
|           | > service during wartime (Persian Gulf War) by           |
|           | > \"tacking\" the 2 periods of active service together.  |
+-----------+----------------------------------------------------------+

Continued on next page 2-29

M26-1, Revised September 16, 1996

2.09 Rules for Calculating Length of Active Duty Service, Continued

+------------+---------------------------------------------------------+
| Lost Time  | > [If the veteran\'s proof of military service contains |
|            | > no reference to lost time, it will be assumed there   |
|            | > was none.]{.underline}                                |
|            | >                                                       |
|            | > Certain types of lost time must be deducted from the  |
|            | > period of active duty service. When deduction of lost |
|            | > time would render the applicant ineligible, and the   |
|            | > reason for the lost time is not clearly indicated on  |
|            | > the discharge papers, determine the reason for the    |
|            | > lost time by consulting the appropriate branch of the |
|            | > service.                                              |
|            | >                                                       |
|            | > [Lost time does not constitute a break in an          |
|            | > otherwise continuous period of active duty. It merely |
|            | > reduces the length of service.]{.underline}           |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| Qualifying | > The period of active duty may include time lost       |
| Lost Time  | > through the use of drugs or alcohol, or through       |
|            | > disease or injury resulting from the applicant\'s own |
|            | > misconduct.                                           |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| Non        | > [The following lost time must be                      |
| qualifying | > deducted]{.underline} from the period of active duty: |
| Lost Time  | >                                                       |
|            | > • Periods of agricultural, industrial and indefinite  |
|            | > [furlough]{.underline}                                |
|            | >                                                       |
|            | > • Time [under arrest]{.underline} in the absence of   |
|            | > acquittal                                             |
|            | >                                                       |
|            | > • Time the applicant was determined to have forfeited |
|            | > pay by reason of [absence without official            |
|            | > leave]{.underline}                                    |
|            | >                                                       |
|            | > • Time spent in [desertion]{.underline} or while      |
|            | > undergoing sentence of [court martial]{.underline}    |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| Other      | > [The following time may not be included]{.underline}  |
| Non        | > in the period of active service:                      |
| qualifying | >                                                       |
| Time       | > • Time spent as a [temporary member of the Coast      |
|            | > Guard Reserve]{.underline}, even if the applicant was |
|            | > on active full-time duty with pay                     |
|            | >                                                       |
|            | > • [Time between the date of induction, of enlistment  |
|            | > in the Reserves, or of commission, and actual         |
|            | > entrance upon active service]{.underline}, unless     |
|            | > applicant was issued orders placing him or her on     |
|            | > active duty for authorized travel                     |
|            | >                                                       |
|            | > • Periods of [active duty for training]{.underline}   |
|            | > (ACDUTRA or ADTNG                                     |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| Reserves   | > See section 2.03 for special rules pertaining to the  |
| or         | > eligibility of Reserve or Guard members and           |
| National   | > calculation of their length of service.               |
| Guard      |                                                         |
+------------+---------------------------------------------------------+

Continued on next page

2-30

September 16, 1996 M26-1, Revised

2.09 Rules for Calculating Length of Active Duty Service, Continued

+------------+---------------------------------------------------------+
| Travel     | > Certified travel time may be included in the period   |
| Time       | > of active service for an applicant whose discharge or |
|            | > separation papers indicate at least 83, but less than |
|            | > 90 days active service during wartime, or at least    |
|            | > 174, but less than 181 days continuous active service |
|            | > during peacetime.                                     |
|            | >                                                       |
|            | > [Travel time must be certified by the applicant\'s    |
|            | > branch of service]{.underline} and may include:       |
|            | >                                                       |
|            | > • Authorized travel to and from active duty           |
|            | >                                                       |
|            | > • Travel required to proceed home by the most direct  |
|            | > route, beginning after midnight on the date of        |
|            | > discharge or release                                  |
|            | >                                                       |
|            | > Obtain the certification by completing VA Form        |
|            | > 21-3101, Request for Information, in accordance with  |
|            | > instructions contained in MP-1, part II, chapter 12,  |
|            | > and forwarding to the appropriate service department. |
|            | >                                                       |
|            | > An applicant dissatisfied with the certification may  |
|            | > submit a statement to                                 |
|            | >                                                       |
|            | > VA explaining his or her objection to the service     |
|            | > department\'s travel                                  |
|            | >                                                       |
|            | > determination and/or determination of:                |
|            | >                                                       |
|            | > • The location of the veteran\'s home or place of     |
|            | > residence upon discharge or release from active duty  |
|            | >                                                       |
|            | > • The length of travel time allowed for the veteran   |
|            | > to reach home upon discharge or release from active   |
|            | > duty                                                  |
|            | >                                                       |
|            | > OR                                                    |
|            | >                                                       |
|            | > • The amount of authorized travel time to the place   |
|            | > of entry upon active duty.                            |
|            | >                                                       |
|            | > Submit the applicant\'s statement, VA Form 21-3101,   |
|            | > and any pertinent                                     |
|            | >                                                       |
|            | > evidence to the service department for                |
|            | > recertification. An applicant                         |
|            | >                                                       |
|            | > dissatisfied with the recertification will be advised |
|            | > of his or her right to                                |
|            | >                                                       |
|            | > apply to the Chairman, Board of Correction of         |
|            | > Military Records of the                               |
|            | >                                                       |
|            | > service department.                                   |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| Service    | > Many discharge or separation papers provide the       |
| for Pay    | > length of service for pay purposes. This should not   |
| Purposes   | > be relied upon as a measure of active duty service.   |
+------------+---------------------------------------------------------+

2-31

M26-1, Revised September 16, 1996

2.10 Rules for Determining Character of Service

+------------+---------------------------------------------------------+
| Purpose    | > The General Rule for Eligibility requires that        |
|            | > service be **other than dishonorable**. This section  |
|            | > contains the rules necessary for making such a        |
|            | > determination.                                        |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| Acceptable | > The following chart contains sources of documentation |
| Proof      | > of character of service and how to use them.          |
+------------+---------------------------------------------------------+

+---------------------------+------------------------------------------+
| **Source**                | **Proves Service other than Dishonorable |
|                           | if:**                                    |
+---------------------------+------------------------------------------+
| Discharge certificate     | Indicates honorable discharge            |
|                           |                                          |
|                           | OR                                       |
|                           |                                          |
|                           | Indicates general discharge              |
|                           |                                          |
|                           | • Note: General discharge is a discharge |
|                           | under honorable conditions               |
+---------------------------+------------------------------------------+
| Certificate of            | Indicates honorable separation or under  |
| Separation, DD 214, or    | honorable conditions                     |
| other separation papers   |                                          |
+---------------------------+------------------------------------------+
| BIRLS                     | Screen indicates character of service as |
|                           | \"HON\" and reason for separation as     |
|                           | \"SAT\"                                  |
+---------------------------+------------------------------------------+
| RPC (Records Processing   | Confirmation obtained from RPC personnel |
| Center)                   | that character of service is acceptable  |
+---------------------------+------------------------------------------+

+------------+---------------------------------------------------------+
| Refer Case | > Refer case to Adjudication in the office having       |
| to         | > jurisdiction over the claims folder, if any, for      |
| Ad         | > determination, if:                                    |
| judication | >                                                       |
| or Not?    | > • Evidence of discharge or release is not expressly   |
|            | > honorable [or]{.underline} under honorable conditions |
|            | > [or]{.underline} dishonorable                         |
|            |                                                         |
|            | ♦ Cases requiring referral to Adjudication include      |
|            | \"bad conduct\" or \"other than honorable\" (OTH on DD  |
|            | 214)                                                    |
|            |                                                         |
|            | > • Discharge is identified as having been upgraded     |
|            | > from other than honorable conditions (Adjudication    |
|            | > may refer such cases to the appropriate service       |
|            | > review board for final determination)                 |
|            | >                                                       |
|            | > OR                                                    |
|            | >                                                       |
|            | > • #2 under the \"Extension of Enlistment\" heading    |
|            | > (this section) occurs.                                |
|            | >                                                       |
|            | > Use VA Form 3232 with a copy of the BIRLS screen with |
|            | > C-file number                                         |
+------------+---------------------------------------------------------+

Continued on next page

2-32

September 16, 1996 M26-1, Revised

2.10 Rules for Determining Character of Service, Continued

+------------+---------------------------------------------------------+
| More Than  | > [One period of qualifying service which was other     |
| One Period | > than dishonorable confers eligibility]{.underline},   |
| of Service | > even where applicant received a nonqualifying         |
|            | > discharge from one or more other period(s) of         |
|            | > service.                                              |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| Active     | > [A veteran currently on active duty is considered to  |
| Duty       | > be serving under honorable conditions]{.underline}    |
|            | > unless or until a nonqualifying discharge or release  |
|            | > occurs.                                               |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| Extension  | > When an applicant extends his or her enlistment,      |
| of         | > there is no \"discharge or release\" from the initial |
| Enlistment | > period of service. If the applicant receives a        |
|            | > nonqualifying discharge from the extended period, he  |
|            | > or she may nevertheless meet the character of service |
|            | > requirement for eligibility in the following 2        |
|            | > situations:                                           |
|            | >                                                       |
|            | > **1.** The extension occurred after the applicant     |
|            | > completed sufficient qualifying                       |
|            | >                                                       |
|            | > service to establish eligibility.                     |
|            | >                                                       |
|            | > **2.** The extension occurred prior to applicant      |
|            | > completing a full period of service, but, the         |
|            | > dishonorable discharge occurred some time after the   |
|            | > applicant completed the period of active service for  |
|            | > which he or she was originally obligated (and such    |
|            | > period meets the length of service requirements of    |
|            | > the general rule for eligibility). Refer such cases   |
|            | > to Adjudication.                                      |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| Res        | > [Reserve or Guard service must be                     |
| erve/Guard | > \"Honorable\"]{.underline} to confer eligibility      |
| Members    | > under the 6-Year Requirement. A \"General\" discharge |
|            | > is nonqualifying, unless the applicant was ordered to |
|            | > active duty and can qualify under the General Rule    |
|            | > for Eligibility rather than the 6-Year Requirement.   |
+------------+---------------------------------------------------------+

2-33

M26-1, Revised September 16, 1996

2.11 Procedure for Calculating the Amount of Entitlement

+-----------+----------------------------------------------------------+
| P         | > Follow these procedures to calculate the maximum       |
| rocedures | > amount of entitlement available to an eligible veteran |
|           | > to obtain a direct or guaranteed loan.                 |
+-----------+----------------------------------------------------------+

+------+---------------------------------------------------------------+
| **St | **Action**                                                    |
| ep** |                                                               |
+------+---------------------------------------------------------------+
| 1    | Begin with \$36,000. If the veteran has not previously used   |
|      | entitlement, do nothing more: \$36,000 is the amount of       |
|      | available entitlement. In all cases, check VA databases to    |
|      | verify whether or not the veteran has previously used         |
|      | entitlement . If there has been previous use of entitlement,  |
|      | go to the next step.                                          |
|      |                                                               |
|      | ALSO                                                          |
|      |                                                               |
|      | • See step 4 for manufactured home usage of entitlement.      |
|      |                                                               |
|      | • See step 5 for proposed usage of entitlement on a loan      |
|      | greater than \$144,000.                                       |
+------+---------------------------------------------------------------+
| 2    | Subtract the amount of any entitlement used in connection     |
|      | with prior loans that has not previously been restored.       |
|      |                                                               |
|      | • Previous restoration will be reflected on the veteran\'s    |
|      | last COE. Any difference between the maximum amount of        |
|      | entitlement available at the time of issuance and the         |
|      | available entitlement indicated on the COE has not been       |
|      | restored.                                                     |
|      |                                                               |
|      | • The amount of entitlement used in connection with a prior   |
|      | loan is the amount endorsed by VA on the COE as used upon     |
|      | guaranty of the loan. It is not altered by partial repayment  |
|      | of the loan.                                                  |
+------+---------------------------------------------------------------+
| 3    | Apply restoration of entitlement rules and add back any       |
|      | amount of entitlement that can be restored                    |
+------+---------------------------------------------------------------+
| 4    | > For manufactured home purposes, the maximum entitlement is  |
|      | > \$20,000. Begin with \$20,000. Subtract the amount of any   |
|      | > entitlement used in connection with prior manufactured home |
|      | > loans that has not previously been restored. Apply          |
|      | > restoration of entitlement rules and add back any amount of |
|      | > entitlement that can be restored                            |
+------+---------------------------------------------------------------+
| 5    | > Veterans obtaining certain types of home loans greater than |
|      | > \$144,000 may use entitlement up to \$50,750. To calculate  |
|      | > the maximum entitlement available in such cases, substitute |
|      | > \$50,750 for \$36,000 and perform steps 1 through 3 above.  |
|      | >                                                             |
|      | > **[NOTE]{.underline}**: Never include the \$14,750          |
|      | > additional entitlement for loans greater than \$144,000 in  |
|      | > the amount of available entitlement shown on the COE.       |
+------+---------------------------------------------------------------+

Continued on next page

2-34

September 16, 1996 M26-1, Revised

2.11 Procedure for Calculating the Amount of Entitlement, Continued

+------------+---------------------------------------------------------+
| History of | > Use this as a reference to determine the maximum      |
| E          | > amount of entitlement authorized by law during any    |
| ntitlement | > particular period of time.                            |
| Maximums   |                                                         |
+------------+---------------------------------------------------------+

+--------------------------------------------+-------------------------+
| **Maximum Entitlement**                    | **Beginning Date**      |
+--------------------------------------------+-------------------------+
| \$2,000                                    | June 22, 1944           |
+--------------------------------------------+-------------------------+
| \$4,000                                    | December 28, 1945       |
+--------------------------------------------+-------------------------+
| \$7,500                                    | July 12, 1950           |
+--------------------------------------------+-------------------------+
| \$12,500                                   | May 7, 1968             |
+--------------------------------------------+-------------------------+
| \$17,500                                   | December 31, 1974       |
+--------------------------------------------+-------------------------+
| \$25,000                                   | October 1, 1978         |
+--------------------------------------------+-------------------------+
| \$27,500                                   | October 1, 1980         |
+--------------------------------------------+-------------------------+
| \$36,000                                   | February 1, 1988        |
+--------------------------------------------+-------------------------+
| \$36,000                                   | December 18, 1989       |
|                                            |                         |
| OR                                         |                         |
|                                            |                         |
| \$46,000 for certain loans greater than    |                         |
| \$144,000                                  |                         |
+--------------------------------------------+-------------------------+
| \$36,000                                   | October 13, 1994        |
|                                            |                         |
| OR                                         |                         |
|                                            |                         |
| \$50,750 for certain loans greater than    |                         |
| \$144,000                                  |                         |
+--------------------------------------------+-------------------------+

2.12 Restoration of Entitlement

+------------+---------------------------------------------------------+
| General    | > Entitlement previously used to obtain a VA home loan  |
| Rule for   | > can be restored only if at least one of the following |
| R          | > 4 sets of conditions is satisfied:                    |
| estoration | >                                                       |
| of         | > **1. DISPOSAL AND REPAYMENT**                         |
| E          | >                                                       |
| ntitlement | > The property which secured the old VA loan has been   |
|            | > disposed of by the veteran or has been destroyed by   |
|            | > fire or other natural hazard                          |
|            | >                                                       |
|            | > AND                                                   |
|            | >                                                       |
|            | > The loan has been paid in full, or if VA has suffered |
|            | > a loss on the loan the loss has been paid in full, or |
|            | > VA has been released from liability as guarantor or   |
|            | > insurer                                               |
+------------+---------------------------------------------------------+

Continued on next page 2-35

M26-1, Revised September 16, 1996

2.12 Restoration of Entitlement, Continued

  -----------------------------------------------------------------------
  General Rule for Restoration of Entitlement (continued)

  -----------------------------------------------------------------------

+------------+---------------------------------------------------------+
|            | > **2. REFINANCE**                                      |
|            | >                                                       |
|            | > The old VA loan has been paid in full (or will be     |
|            | > paid in full by the new loan)                         |
|            | >                                                       |
|            | > AND                                                   |
|            | >                                                       |
|            | > The veteran will be using his or her entitlement to   |
|            | > obtain a new loan secured by the same property which  |
|            | > secured the VA loan paid in full                      |
|            | >                                                       |
|            | > AND                                                   |
|            | >                                                       |
|            | > The new loan will refinance a mortgage or other lien  |
|            | > on the property.                                      |
|            | >                                                       |
|            | > **3. ONE TIME RESTORATION**                           |
|            | >                                                       |
|            | > The old VA loan has been paid in full, but the        |
|            | > property securing it has not been disposed of (and    |
|            | > the conditions for #2 REFINANCE above are not met).   |
|            | > These conditions of restoration can be used by the    |
|            | > veteran ONE TIME ONLY. After such use, any future     |
|            | > restoration will require the veteran to dispose of    |
|            | > **all** property previously financed with a VA loan.  |
|            | >                                                       |
|            | > **4. SUBSTITUTION OF ENTITLEMENT**                    |
|            | >                                                       |
|            | > A qualified veteran has agreed to assume the loan and |
|            | > substitute his or her entitlement for that of the     |
|            | > veteran whose entitlement is currently tied to the    |
|            | > loan                                                  |
|            | >                                                       |
|            | > **See separate headings in this section for specifics |
|            | > on each of the 4 sets of conditions.**                |
+------------+---------------------------------------------------------+

+-----------+---+-------+-------------------------------------------------+
| Specifics | > |       |                                                 |
| on        |   |       |                                                 |
| \         | T |       |                                                 |
| "Disposal | h |       |                                                 |
| and       | e |       |                                                 |
| Re        | > |       |                                                 |
| payment\" |   |       |                                                 |
|           | f |       |                                                 |
|           | o |       |                                                 |
|           | l |       |                                                 |
|           | l |       |                                                 |
|           | o |       |                                                 |
|           | w |       |                                                 |
|           | i |       |                                                 |
|           | n |       |                                                 |
|           | g |       |                                                 |
|           | > |       |                                                 |
|           |   |       |                                                 |
|           | c |       |                                                 |
|           | h |       |                                                 |
|           | a |       |                                                 |
|           | r |       |                                                 |
|           | t |       |                                                 |
|           | > |       |                                                 |
|           |   |       |                                                 |
|           | e |       |                                                 |
|           | x |       |                                                 |
|           | p |       |                                                 |
|           | l |       |                                                 |
|           | a |       |                                                 |
|           | i |       |                                                 |
|           | n |       |                                                 |
|           | s |       |                                                 |
|           | > |       |                                                 |
|           |   |       |                                                 |
|           | r |       |                                                 |
|           | e |       |                                                 |
|           | s |       |                                                 |
|           | t |       |                                                 |
|           | o |       |                                                 |
|           | r |       |                                                 |
|           | a |       |                                                 |
|           | t |       |                                                 |
|           | i |       |                                                 |
|           | o |       |                                                 |
|           | n |       |                                                 |
|           | > |       |                                                 |
|           |   |       |                                                 |
|           | u |       |                                                 |
|           | n |       |                                                 |
|           | d |       |                                                 |
|           | e |       |                                                 |
|           | r |       |                                                 |
|           | > |       |                                                 |
|           |   |       |                                                 |
|           | \ |       |                                                 |
|           | " |       |                                                 |
|           | D |       |                                                 |
|           | i |       |                                                 |
|           | s |       |                                                 |
|           | p |       |                                                 |
|           | o |       |                                                 |
|           | s |       |                                                 |
|           | a |       |                                                 |
|           | l |       |                                                 |
|           | > |       |                                                 |
|           |   |       |                                                 |
|           | a |       |                                                 |
|           | n |       |                                                 |
|           | d |       |                                                 |
|           | > |       |                                                 |
|           |   |       |                                                 |
|           | R |       |                                                 |
|           | e |       |                                                 |
|           | p |       |                                                 |
|           | a |       |                                                 |
|           | y |       |                                                 |
|           | m |       |                                                 |
|           | e |       |                                                 |
|           | n |       |                                                 |
|           | t |       |                                                 |
|           | \ |       |                                                 |
|           | " |       |                                                 |
|           | > |       |                                                 |
|           |   |       |                                                 |
|           | c |       |                                                 |
|           | o |       |                                                 |
|           | n |       |                                                 |
|           | d |       |                                                 |
|           | i |       |                                                 |
|           | t |       |                                                 |
|           | i |       |                                                 |
|           | o |       |                                                 |
|           | n |       |                                                 |
|           | s |       |                                                 |
|           | > |       |                                                 |
|           |   |       |                                                 |
|           | i |       |                                                 |
|           | n |       |                                                 |
|           | > |       |                                                 |
|           |   |       |                                                 |
|           | f |       |                                                 |
|           | u |       |                                                 |
|           | r |       |                                                 |
|           | t |       |                                                 |
|           | h |       |                                                 |
|           | e |       |                                                 |
|           | r |       |                                                 |
|           | > |       |                                                 |
|           |   |       |                                                 |
|           | d |       |                                                 |
|           | e |       |                                                 |
|           | t |       |                                                 |
|           | a |       |                                                 |
|           | i |       |                                                 |
|           | l |       |                                                 |
|           | . |       |                                                 |
+-----------+---+-------+-------------------------------------------------+
|           |   | **Is  | **Explanation**                                 |
|           |   | sue** |                                                 |
+-----------+---+-------+-------------------------------------------------+
|           |   | T     | [The timing of the disposal of the property and |
|           |   | iming | repayment of the loan does not                  |
|           |   |       | matter]{.underline}; (i.e., either can occur    |
|           |   |       | before or after the other, or at the same time) |
|           |   |       | as long as both have occurred prior to          |
|           |   |       | restoration.                                    |
+-----------+---+-------+-------------------------------------------------+

2-36

Continued on next page

September 16, 1996 M26-1, Revised

2.12 Restoration of Entitlement, Continued

  -----------------------------------------------------------------------
  Specifics on \"Disposal and Repayment\" (continued)

  -----------------------------------------------------------------------

+---------+------------------------------------------------------------+
| **      | **Explanation**                                            |
| Issue** |                                                            |
+---------+------------------------------------------------------------+
| D       | > Disposal includes transfer or sale of the property,      |
| isposal | > including sale by assumption, and sale by installment    |
|         | > sales contract (under which the veteran retains legal    |
| Proof   | > title to the property subject to the right of the        |
| of      | > purchaser to acquire legal title upon satisfying all     |
| D       | > contract terms).                                         |
| isposal | >                                                          |
|         | > • Information on ownership of property purchased using   |
| Relo    | > entitlement is requested in items 8 through 15 of VA     |
| ca-tion | > Form 26- 1880. If this is not provided, check any other  |
| C       | > available sources for this information. If such          |
| ontract | > information is not available, use FL 26-284 to request   |
|         | > that the veteran supply such information.                |
|         |                                                            |
|         | • A signed contract under a company plan to purchase a     |
|         | borrower\'s home when he or she is transferred, if it      |
|         | constitutes equitable disposal of the property, may meet   |
|         | the \"disposal\" requirement. Consult Central Office (264) |
|         | in such cases.                                             |
+---------+------------------------------------------------------------+
| Rep     | > The following are acceptable as conclusive evidence of a |
| ay-ment | > paid-in-full loan:                                       |
| -       | >                                                          |
|         | > • Evidence in the LGY Index system indicating the loan   |
| (Proof  | > is paid in full                                          |
| Of)     | >                                                          |
|         | > • Evidence in the Semiannual Alpha or Numeric COIN GIL   |
|         | > Listing (microfiche) showing a loan code of 45           |
|         | >                                                          |
|         | > • Canceled LGC or notice from the lender in a loan       |
|         | > folder which has not been retired                        |
|         | >                                                          |
|         | > • COE endorsed to reflect restoration of entitlement on  |
|         | > the loan                                                 |
|         | >                                                          |
|         | > • Station\'s determination that the loan is              |
|         | > statistically paid in full                               |
|         | >                                                          |
|         | > • Other reliable evidence presently being used by        |
|         | > individual stations (e.g. California escrow closing      |
|         | > statements or HUD 1 Settlement statements clearly        |
|         | > indicating payment of the loan in full)                  |
|         | >                                                          |
|         | > • Contact with the holder confirming paid-in-full status |
|         | >                                                          |
|         | > • For prior direct loans, check the nationwide Register  |
|         | > of Terminated Direct Loans                               |
|         |                                                            |
|         | ♦ An \"R\" in place of the leading zero of the entitlement |
|         | code will indicate that entitlement was restored.          |
|         |                                                            |
|         | > [NOTE]{.underline}: A retired folder will only be        |
|         | > recalled as a last resort if no other evidence can serve |
|         | > as verification of a paid-in full loan.                  |
+---------+------------------------------------------------------------+

Continued on next page 2-37

M26-1, Revised September 16, 1996

2.12 Restoration of Entitlement, Continued

  -----------------------------------------------------------------------
  Specifics on \"Disposal and Repayment\" (continued)

  -----------------------------------------------------------------------

+---------+------------------------------------------------------------+
| **      | **Explanation**                                            |
| Issue** |                                                            |
+---------+------------------------------------------------------------+
| VA Loss | > If the evidence indicates a code 48, verify that the     |
| on the  | > Government has not incurred a loss on the loan before    |
| Loan    | > making a determination. Follow the verification          |
|         | > procedures under the \"Calculate Amount of Entitlement   |
| Repay-  | > for Eligible Applicants\" heading in section 2.13 of     |
|         | > this manual                                              |
| ment of | >                                                          |
| Loss    | > Entitlement cannot be restored                           |
|         | >                                                          |
|         | > • If the Government has paid a claim for guaranty or     |
|         | > insurance unless the veteran fully repays any loss       |
|         | > incurred by the Government due to such claim payment.    |
|         | >                                                          |
|         | > OR                                                       |
|         | >                                                          |
|         | > • If VA accepted, or authorized the holder to accept, a  |
|         | > voluntary conveyance of the property (deed-in-lieu of    |
|         | > foreclosure) and released the veteran from liability,    |
|         | > unless the veteran fully repays any loss incurred by the |
|         | > Government due to such conveyance                        |
|         | >                                                          |
|         | > **VA\'s waiver or compromise of the right to collect     |
|         | > indebtedness from the veteran does not satisfy this      |
|         | > requirement, nor does discharge of debt through          |
|         | > bankruptcy.** **[Actual repayment of the Government\'s   |
|         | > loss is required]{.underline}**                          |
+---------+------------------------------------------------------------+
| Release | > When the Secretary of Defense accepts a conveyance and   |
| of      | > assumes but does not pay off the loan, evidence that the |
| VA\'s   | > Department of Defense has acquired the property and      |
| li      | > assumed the loan is construed as releasing VA from       |
| ability | > liability as guarantor or insurer.                       |
+---------+------------------------------------------------------------+

Continued on next page

**2-38**

September 16, 1996 M26-1, Revised

2.12 Restoration of Entitlement, Continued

+------------+---------------------------------------------------------+
| Specifics  | > The following chart explains restoration associated   |
| on         | > with refinance in further detail.                     |
| Refinance  |                                                         |
+------------+---------------------------------------------------------+

+--------+-------------------------------------------------------------+
| **I    | **Explanation**                                             |
| ssue** |                                                             |
+--------+-------------------------------------------------------------+
| When   | These conditions of restoration apply whenever the veteran  |
| This   | has, or at one time had, a VA loan on the property, and     |
| A      | wishes to obtain a new VA loan to refinance some type of    |
| pplies | lien on the same property. The new loan may be used to      |
|        | refinance:                                                  |
|        |                                                             |
|        | • An existing VA loan                                       |
|        |                                                             |
|        | OR                                                          |
|        |                                                             |
|        | • A conventional or FHA loan or other type of lien secured  |
|        | by the same property on which a previous VA loan had been   |
|        | paid off.                                                   |
+--------+-------------------------------------------------------------+
| IRRRLs | [IRRRLs are not within the scope of this                    |
|        | discussion]{.underline} since they do not involve           |
|        | restoration; i.e., the making of an IRRRL is based on the   |
|        | veteran\'s use of entitlement for the old loan being        |
|        | refinanced, and his or her entitlement is not impacted by   |
|        | the new loan.                                               |
+--------+-------------------------------------------------------------+
| R      | The loan obtained will be a cash-out refinancing loan,      |
| equire | requiring the veteran to meet all qualifying criteria       |
| -ments | including credit and income standards and occupancy.        |
|        |                                                             |
|        | Applications for this type of restoration must be           |
|        | accompanied by a copy of an application to a lender to      |
|        | refinance the property and a signed certification that the  |
|        | property to be refinanced is the same property for which    |
|        | the veteran previously used the entitlement to be restored. |
+--------+-------------------------------------------------------------+
| Proce  | Check the box on the COE that reads, \"Excluded entitlement |
| -dures | previously used for VA LIN\_\_\_\_\_\_\_\_\_\_\_ as shown   |
|        | herein is available only for use in connection with the     |
|        | property which secured that loan.\" Fill in the old loan    |
|        | number.                                                     |
|        |                                                             |
|        | Complete the restoration and any required GIL coding of the |
|        | payoff of the old loan at the time the closed refinancing   |
|        | loan is received for guaranty.                              |
+--------+-------------------------------------------------------------+

Continued on next page 2-39

M26-1, Revised September 16, 1996

2.12 Restoration of Entitlement, Continued

+------------+---------------------------------------------------------+
| Specifics  | > The following chart explains one-time restoration in  |
| on One     | > further detail.                                       |
| Time       |                                                         |
| R          |                                                         |
| estoration |                                                         |
+------------+---------------------------------------------------------+

+--------+-------------------------------------------------------------+
| **I    | **Explanation**                                             |
| ssue** |                                                             |
+--------+-------------------------------------------------------------+
| Proce- | Check the box on the COE that reads, \"Entitlement          |
|        | previously used for VA LIN \_\_\_\_\_\_\_\_\_\_\_ has been  |
| dures  | restored without disposal of the property, under provision  |
|        | of 38 U.S.C. 3702(b)(4). Any future restoration requires    |
|        | disposal of **all** property obtained with a VA loan.\"     |
|        | Fill in the old loan number                                 |
+--------+-------------------------------------------------------------+

+------------+---------------------------------------------------------+
| *          | > The following chart explains restoration under        |
| *Specifics | > Substitution of Entitlement conditions in further     |
| on         | > detail.                                               |
| Su         |                                                         |
| bstitution |                                                         |
| of         |                                                         |
| Ent        |                                                         |
| itlement** |                                                         |
+------------+---------------------------------------------------------+

+--------+-------------------------------------------------------------+
| **I    | **Explanation**                                             |
| ssue** |                                                             |
+--------+-------------------------------------------------------------+
| R      | [The buying veteran must have sufficient available          |
| equire | entitlement to replace the amount of entitlement used by    |
| -ments | the seller in originally obtaining the loan]{.underline},   |
|        | and must authorize a charge to his or her entitlement.      |
|        |                                                             |
|        | • If a manufactured home purchase, the buyer must dispose   |
|        | of any manufactured homes previously bought with a VA loan. |
|        |                                                             |
|        | The buying veteran must qualify from a credit standpoint.   |
|        |                                                             |
|        | The buying veteran must assume all liability for the loan   |
|        | and all                                                     |
|        |                                                             |
|        | liability of the seller under the terms of the loan         |
|        | instruments.                                                |
|        |                                                             |
|        | The buying veteran must certify that he or she intends to   |
|        |                                                             |
|        | personally occupy the property as his or her principal      |
|        |                                                             |
|        | residence.                                                  |
|        |                                                             |
|        | The loan must be current at time of application.            |
+--------+-------------------------------------------------------------+
| Steps  | 1\. A release of liability for the seller is processed by   |
|        | VA, the holder, or an authorized servicing agent.           |
|        |                                                             |
|        | 2\. VA processes a substitution of entitlement for the      |
|        | buying veteran.                                             |
+--------+-------------------------------------------------------------+

2-40

Continued on next page

September 16, 1996 M26-1, Revised

2.12 Restoration of Entitlement, Continued

  -----------------------------------------------------------------------
  Specifics on One Time Restoration (continued)

  -----------------------------------------------------------------------

+--------+-------------------------------------------------------------+
| **I    | **Explanation**                                             |
| ssue** |                                                             |
+--------+-------------------------------------------------------------+
| Loan   | For loans with commitments made on or after 3/1/88, in most |
| Commi  | cases, requests for release of liability on loan            |
| t-ment | assumptions are processed by the holder or the authorized   |
| date   | servicing agent. VA will process the substitution of        |
| before | entitlement, generally after the holder has provided notice |
| or     | of an approved transfer.                                    |
| after  |                                                             |
| 3/1/88 | For loans with commitments made before 3/1/88, VA will      |
|        | process any releases of liability (see M26-3, pars. 2.48    |
|        | through 2.57).                                              |
|        |                                                             |
|        | • If title was previously transferred and a release of      |
|        | liability was not obtained, the veteran buyer\'s            |
|        | qualification from a credit standpoint will be determined   |
|        | as of the date of application for substitution, not when    |
|        | title transferred.                                          |
|        |                                                             |
|        | • If release of liability was previously granted, the       |
|        | veteran buyer is presumed to qualify from a credit          |
|        | standpoint as long as the loan is current at the time of    |
|        | application, and no credit information will be requested    |
|        | from the buyer.                                             |
+--------+-------------------------------------------------------------+
| Applic | Provide the buyer with VA Form 26-8893, Instructions        |
| a-tion |                                                             |
| Forms  | for Purchaser Assuming a GI Loan or substituting GI Loan    |
|        |                                                             |
|        | Entitlement.                                                |
|        |                                                             |
|        | The veterans involved in the transaction must submit the    |
|        | following forms as an application for substitution of       |
|        | entitlement.                                                |
|        |                                                             |
|        | For all cases:                                              |
|        |                                                             |
|        | • VA Form 26-8106, Statement of Veteran Assuming GI Loan    |
|        | (Substitution of Entitlement)                               |
|        |                                                             |
|        | • Buyer\'s and Seller\'s COEs, or if not previously issued, |
|        | VA Form 26-1880 with supporting documentation               |
+--------+-------------------------------------------------------------+

2-41

Continued on next page

M26-1, Revised September 16, 1996

2.12 Restoration of Entitlement, Continued

  -----------------------------------------------------------------------
  Specifics on One Time Restoration of Entitlement (continued)

  -----------------------------------------------------------------------

+-------+--------------------------------------------------------------+
| **Is  | **Explanation**                                              |
| sue** |                                                              |
+-------+--------------------------------------------------------------+
| App   | > In addition, for cases where no release of liability has   |
| lica- | > previously been granted:                                   |
| tion  |                                                              |
| Forms | • VA Form 26-6381, Application for Release From Personal     |
| (c    | Liability to the Government on a Home Loan                   |
| onti- |                                                              |
| nued) | • VA Form 26-6382, Statement of Purchaser or Owner Assuming  |
|       | Seller\'s Loan                                               |
|       |                                                              |
|       | • VA Form 26-8497, Request for Verification of Employment    |
|       |                                                              |
|       | ♦ Or alternative documentation (See paragraph 2.49e(1) of    |
|       | M26-3).                                                      |
|       |                                                              |
|       | • VA Form 26-8497a, Request for Verification of Deposit      |
|       |                                                              |
|       | • VA Form 26-6807, Financial Statement                       |
|       |                                                              |
|       | • Certified check or money order for the amount of the       |
|       | credit report (amount designated for release of liability    |
|       | cases)                                                       |
+-------+--------------------------------------------------------------+
| St    | Applications are processed by the station with jurisdiction  |
| ation | over the property location.                                  |
| P     |                                                              |
| roce- | If all requirements for substitution of entitlement have     |
| dures | been met except the [seller\'s]{.underline} COE or VA Form   |
|       | 26-1880 have not been received after reasonable attempts to  |
|       | obtain such, proceed with the substitution.                  |
+-------+--------------------------------------------------------------+
| 1     | Recall the folder if retired. (File all papers in the folder |
|       | when processing is complete)                                 |
+-------+--------------------------------------------------------------+
| 2     | Use the original loan number                                 |
+-------+--------------------------------------------------------------+
| 3     | Record status information and source data on VA Form         |
|       | 26-6379, Progress Sheet on Application for Release From      |
|       | Liability or Substitution of Entitlement, and VA Form        |
|       | 26-6380, Register of Applications for Release From Liability |
|       | and Substitution of Entitlement                              |
+-------+--------------------------------------------------------------+
| 4     | Apply the underwriting procedures described in section 5.02  |
|       | of this manual. Determine whether all requirements for       |
|       | release of liability/substitution of entitlement are met,    |
|       | including whether the buyers meet credit and income          |
|       | standards, if applicable. If standards are met, proceed to   |
|       | step 5. If not, skip to step 9.                              |
+-------+--------------------------------------------------------------+

2-42

Continued on next page

September 16, 1996 M26-1, Revised

2.12 Restoration of Entitlement, Continued

+-----------------------------------------------------------------------+
| Specifics on One Time Restoration of Entitlement (continued)          |
|                                                                       |
| Station Procedures (continued)                                        |
+-----------------------------------------------------------------------+

+-------+--------------------------------------------------------------+
| **Is  | **Explanation**                                              |
| sue** |                                                              |
+-------+--------------------------------------------------------------+
| 5     | Advise the veteran-seller by letter that the application has |
|       | been approved (and the sale may be closed, if applicable)    |
|       |                                                              |
|       | AND that                                                     |
|       |                                                              |
|       | Substitution will not be effected until a copy of the        |
|       | assumption clause (or in some states, and when title has     |
|       | already been transferred, a properly signed \"Agreement      |
|       | Creating Liability to Holder and to the United States\") has |
|       | been received by VA, and a determination is made that the    |
|       | loan is current.                                             |
+-------+--------------------------------------------------------------+
| 6     | Follow release of liability procedures for the distribution  |
|       | of legal documents. (See section IV of M26-3.)               |
+-------+--------------------------------------------------------------+
| 7     | Return the veteran-seller\'s COE showing restoration of      |
|       | entitlement to the veteran, together with VA Form 26-1880a,  |
|       | and one copy of the assumption agreement, if such was        |
|       | executed.                                                    |
+-------+--------------------------------------------------------------+
| 8     | Return the veteran-buyer\'s COE to him or her, properly      |
|       | endorsed to reflect use of entitlement, together with FL     |
|       | 26-589, VA Pamphlet 26-5, and one copy of the agreement, if  |
|       | such was executed.                                           |
+-------+--------------------------------------------------------------+
| 9     | If not approved, send FL 26-558 to the veteran-obligors and  |
|       | FL 26-558a to the prospective assumers to notify them of the |
|       | rejection of their application for substitution of           |
|       | entitlement. These notices contain required ECOA language.   |
|       | Retain copies of the notices in the loan folder in           |
|       | accordance with RCS VB-1, part I, item No. 12-076.300        |
+-------+--------------------------------------------------------------+

+------------+---------------------------------------------------------+
| Example:   | > Sally purchased a home with a VA loan, then           |
|            | > refinanced the loan with an FHA loan. She now wants   |
| **R        | > to refinance with another VA loan. She can obtain     |
| efinance** | > restoration in order to get a VA cash-out refinancing |
|            | > loan.                                                 |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| Example:   | > John has an existing VA loan and wants to obtain a VA |
|            | > cash-out refinancing loan. He can obtain restoration  |
| **R        | > since the requirement for the prior VA loan to be     |
| efinance** | > paid in full is considered met when closing of the    |
|            | > new loan occurs.                                      |
+------------+---------------------------------------------------------+

Continued on next page

2-43

M26-1, Revised September 16, 1996

2.12 Restoration of Entitlement, Continued

+------------+---------------------------------------------------------+
| Example:   | > Jody purchased a home with a VA loan, then refinanced |
|            | > it with a conventional loan. She subsequently had to  |
| **One      | > move out of the area and rented out the property. She |
| Time**     | > now wants to purchase another home to occupy, using a |
|            | > VA loan. Jody can do so under \"one-time\"            |
| **Res      | > restoration conditions. However, she may not be       |
| toration** | > granted restoration again until both of those         |
|            | > properties are disposed of.                           |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| Example:   | > Joe purchased a property from Cheryl, and assumed the |
|            | > VA loan. Cheryl had originally used \$36,000 of her   |
| **Su       | > entitlement to purchase the home. Joe wishes to       |
| bstitution | > substitute his entitlement for Cheryl\'s, but he only |
| of**       | > has \$33,000 available entitlement. No substitution   |
|            | > can be done, and Cheryl cannot have her entitlement   |
| **Ent      | > restored until the loan is paid in full or another    |
| itlement** | > eligible veteran assumes the loan and substitutes     |
|            | > \$36,000 entitlement.                                 |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| Example:   | > Anthony purchased a home with a VA loan, then sold it |
|            | > by assumption and obtained a release of liability.    |
| **Disposal | > The loan was subsequently foreclosed, and VA paid a   |
| and        | > claim to the lender. No debt was established against  |
| R          | > Anthony, however, he cannot have the entitlement he   |
| epayment** | > originally used to purchase the home restored unless  |
|            | > he repays the Government for the loss incurred.       |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| Waiver of  | > One or more of the requirements for restoration of    |
| R          | > entitlement may be waived by the Secretary **only**   |
| estoration | > if the veteran was a victim of disastrous             |
| Re         | > circumstances caused by conditions beyond his or her  |
| quirements | > control. \"Disastrous\" usually pertains to [acts of  |
|            | > nature]{.underline}. If station management believes   |
|            | > such action is warranted, they may submit the case to |
|            | > Central Office (264) for consideration, accompanied   |
|            | > by a full development of the pertinent facts.         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| Procedures | > Process requests for restoration of entitlement as    |
|            | > follows:                                              |
+------------+---------------------------------------------------------+

  ---------- --------------------------------------------------------------
  **Step**   **Action**

  1          If the case involves substitution of entitlement, forward to
             the office of jurisdiction for processing. Process any other
             restoration cases at the station receiving the request for
             restoration.
  ---------- --------------------------------------------------------------

2-44

Continued on next page

September 16, 1996 M26-1, Revised

2.12 Restoration of Entitlement, Continued

  -----------------------------------------------------------------------
  Procedures (continued)

  -----------------------------------------------------------------------

+-------+--------------------------------------------------------------+
| **S   | **Action**                                                   |
| tep** |                                                              |
+-------+--------------------------------------------------------------+
| 2     | Require submission of, and review:                           |
|       |                                                              |
|       | • VA Form 26-1880                                            |
|       |                                                              |
|       | • Any previously issued COEs                                 |
|       |                                                              |
|       | AND                                                          |
|       |                                                              |
|       | • Supporting documents concerning the veteran\'s service.    |
|       |                                                              |
|       | For restoration under \"refinance\" conditions, also         |
|       | require:                                                     |
|       |                                                              |
|       | • Copy of the application to the lender                      |
|       |                                                              |
|       | • Certification that the property to be refinanced is the    |
|       | same as the one for which veteran used the entitlement to be |
|       | restored.                                                    |
+-------+--------------------------------------------------------------+
| 3     | For insufficient or incomplete applications, request         |
|       | additional information using FL 26-284 and suspend           |
|       | processing pending receipt of requested materials.           |
|       |                                                              |
|       | • Also, suspend processing if prior eligibility was          |
|       | established while veteran was on active duty, veteran has    |
|       | since been discharged or released, and evidence that service |
|       | was \"other than dishonorable\" is needed                    |
|       |                                                              |
|       | Do not suspend processing for:                               |
|       |                                                              |
|       | • Incomplete VA Form 26-1880 when incomplete items are not   |
|       | pertinent to the case.                                       |
+-------+--------------------------------------------------------------+
| 4     | Determine the status of the previous loan(s) by using the    |
|       | LGY Index and/or the nationwide COIN GIL microfiche          |
|       | listings. If that is inadequate, request information from    |
|       | the loan folder through the office of jurisdiction.          |
+-------+--------------------------------------------------------------+

Continued on next page 2-45

M26-1, Revised September 16, 1996

2.12 Restoration of Entitlement, Continued

  -----------------------------------------------------------------------
  Procedures (continued)

  -----------------------------------------------------------------------

+-------+--------------------------------------------------------------+
| **S   | **Action**                                                   |
| tep** |                                                              |
+-------+--------------------------------------------------------------+
| 5     | > If restoration is approved, adjust COE as follows:         |
|       | >                                                            |
|       | > • Change entitlement code to 5                             |
|       | >                                                            |
|       | > • Draw a line in red ink through the amount of entitlement |
|       | > used                                                       |
|       | >                                                            |
|       | > • Write \"EXCLUDED\" next to that amount                   |
|       | >                                                            |
|       | > • Date and initial the entry                               |
|       | >                                                            |
|       | > • Enter the amount of entitlement available in the         |
|       | > \"Available\" column (restored entitlement plus any unused |
|       | > portion of entitlement)                                    |
|       | >                                                            |
|       | > • Check any appropriate boxes on top of form               |
|       |                                                              |
|       | ♦ For manufactured home use                                  |
|       |                                                              |
|       | ♦ For refinance use                                          |
|       |                                                              |
|       | > Have the COE signed by the Director, Loan Guaranty         |
|       | > Officer, Assistant Loan Guaranty Officer, or designee      |
|       | > under 38 CFR 36.4242                                       |
+-------+--------------------------------------------------------------+
| 6     | > Send the updated COE and any discharge or separation       |
|       | > papers submitted to the veteran using VA Form 26-1880a,    |
|       | > Restoration of Entitlement Notice.                         |
+-------+--------------------------------------------------------------+
| 7     | > Immediately notify the office of jurisdiction of the       |
|       | > restoration and date by e-mail or other expeditious means. |
+-------+--------------------------------------------------------------+
| 8     | > Use FL 26-620 for denial of restoration requests.          |
+-------+--------------------------------------------------------------+
| 9     | > In cases other than substitution of entitlement, the       |
|       | > station issuing the COE will file the VA Form 26-1880 and  |
|       | > supporting documents in a separate file within the Loan    |
|       | > Guaranty activity for evaluation purposes. This material   |
|       | > may be disposed of in accordance with RCS VB-1, part I,    |
|       | > item No. 12-060.000.                                       |
+-------+--------------------------------------------------------------+
| 10    | > If an office of jurisdiction discovers that a veteran\'s   |
|       | > entitlement has been previously restored, a duplicate COE  |
|       | > will be issued by that station or the station that         |
|       | > received the request under regular procedures for such     |
|       | > issuance (see Section 2.13, \"Duplicate COEs\" heading).   |
|       | > If subsequent requests are received, make direct contact   |
|       | > with the veteran to determine whether issuance of a        |
|       | > duplicate is warranted and legitimate                      |
+-------+--------------------------------------------------------------+

Continued on next page

2-46

September 16, 1996 M26-1, Revised

2.12 Restoration of Entitlement, Continued

+------------+---------------------------------------------------------+
| Coding     | > The office of jurisdiction must code any restoration  |
|            | > into the GIL system immediately upon notification.    |
|            | > The following chart provides procedures:              |
+------------+---------------------------------------------------------+

+-------+--------------------------------------------------------------+
| **S   | **Action**                                                   |
| tep** |                                                              |
+-------+--------------------------------------------------------------+
| 1     | > For restoration of entitlement used to obtain a direct     |
|       | > loan, go to step 4.                                        |
|       | >                                                            |
|       | > For other loans, code the restoration according to         |
|       | > instructions in M26-7 upon notification that restoration   |
|       | > has been granted.                                          |
|       |                                                              |
|       | • [Exception]{.underline}: For restoration under             |
|       | \"refinance\" conditions, code the payoff of the old loan    |
|       | and restoration in GIL at the time the closed refinancing    |
|       | loan is received for guaranty.                               |
+-------+--------------------------------------------------------------+
| 2     | > Annotate the current Semiannual Listing of GIL Master      |
|       | > Records to show that entitlement has been restored by      |
|       | > placing \"Excluded on \_\_\_\_\_\_\_\" and entering        |
|       | > appropriate date on the same line as the loan number.      |
|       | >                                                            |
|       | > • If the loan number of a paid-in-full loan does not       |
|       | > appear on the numerical listing, the number and other      |
|       | > pertinent information should be inserted in the proper     |
|       | > sequence.                                                  |
+-------+--------------------------------------------------------------+
| 3     | > Review future GIL listing to ensure coding is correct.     |
|       | > Use:                                                       |
|       | >                                                            |
|       | > • Complete Alphabetical and Numerical Listing of GIL       |
|       | > Active and Terminated Master Records produced April 30 and |
|       | > October 31 of each year                                    |
|       | >                                                            |
|       | > • Monthly updates                                          |
|       |                                                              |
|       | ♦ First monthly update shows loan terminations added during  |
|       | that month                                                   |
|       |                                                              |
|       | ♦ Subsequent monthly updates show terminations resequenced   |
|       | by loan number for all months since the last complete        |
|       | Alphabetical and Numerical Listing (i.e., since April 30 or  |
|       | October 31).                                                 |
|       |                                                              |
|       | > After review, listings may be disposed of in accordance    |
|       | > with RCS VB-1, part I, item No. 12-210.100                 |
+-------+--------------------------------------------------------------+
| 4     | > For direct loans, code the restoration action according to |
|       | > instructions in M26-11, paragraph 3.31d, as soon as        |
|       | > restoration is granted.                                    |
+-------+--------------------------------------------------------------+

Continued on next page

2-47

M26-1, Revised September 16, 1996

2.12 Restoration of Entitlement, Continued

  -----------------------------------------------------------------------
  Coding (continued)

  -----------------------------------------------------------------------

+-------+--------------------------------------------------------------+
| **S   | **Action**                                                   |
| tep** |                                                              |
+-------+--------------------------------------------------------------+
| 5     | > Annotate the nationwide Register of Terminated Direct      |
|       | > Loans (COIN PLS 52-01) to show that entitlement has been   |
|       | > restored by entering an \"R\" in place of the leading zero |
|       | > of the entitlement code by the appropriate loan number.    |
|       | >                                                            |
|       | > Review microfiche on future Register to ensure coding is   |
|       | > correct.                                                   |
|       | >                                                            |
|       | > • Each station will receive an updated Register as of      |
|       | > April 30 and October 31 of each year                       |
+-------+--------------------------------------------------------------+

2.13 How to Process Application and Issue COE or Denial

+------------+---------------------------------------------------------+
| Who Does   | > [Any station]{.underline} receiving a request for a   |
| it?        | > new or updated COE, or a duplicate COE, may process   |
|            | > the request.                                          |
|            | >                                                       |
|            | > [EXCEPT]{.underline}                                  |
|            | >                                                       |
|            | > [If restoration by substitution of entitlement is     |
|            | > involved]{.underline}, the station with jurisdiction  |
|            | > over the property involved in the substitution must   |
|            | > process the request for substitution of entitlement   |
+------------+---------------------------------------------------------+
| What Does  | > The following should be submitted with every request  |
| A          | > for a COE, duplicate COE, or restoration of           |
| pplication | > entitlement:                                          |
| Consist    | >                                                       |
| Of?        | > • Completed VA Form 26-1880                           |
|            | >                                                       |
|            | > • Most recent \"other than dishonorable\" discharge   |
|            | > or separation papers from qualifying active duty, or  |
|            | > other acceptable proof of military service            |
|            | >                                                       |
|            | > • Any existing COE                                    |
|            | >                                                       |
|            | > [Exceptions Requiring Different Application           |
|            | > Materials:]{.underline}                               |
|            | >                                                       |
|            | > • Unremarried surviving spouse of a veteran who died  |
|            | > while in service or from a service-connected          |
|            | > disability (see Section 2.05, \"Application           |
|            | > Materials\" heading)                                  |
|            | >                                                       |
|            | > • Spouse of a serviceperson missing in action or      |
|            | > prisoner of war (see section 2.06, \"Application      |
|            | > Materials\" heading)                                  |
|            | >                                                       |
|            | > • Service with Allied Countries in World War II (see  |
|            | > section 2.07, \"Application Materials\" heading)      |
+------------+---------------------------------------------------------+

2-48 Continued on next page

September 16, 1996 M26-1, Revised

2.13 How to Process Application and Issue COE or Denial, Continued

+------------+---------------------------------------------------------+
| Acceptable | > The following table provides specifics on different   |
| Proof of   | > types of proof of military service considered         |
| Military   | > acceptable.                                           |
| Service    |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| **         | **Specifics**                                           |
| Document** |                                                         |
+------------+---------------------------------------------------------+
| Discharge  | > • Can be legible photostats or faxed copies of        |
| or         | > originals                                             |
| Separation |                                                         |
| Papers     | • Must show dates of entry onto, and separation from,   |
|            | active duty, and character of service                   |
|            |                                                         |
|            | • DD 214, copy 4, is the most common                    |
+------------+---------------------------------------------------------+
| Statement  | > Use when there are no discharge papers or such papers |
| of Service | > do not provide dates of service, in the following     |
|            | > circumstances:                                        |
|            | >                                                       |
|            | > • Applicant on active duty was discharged for the     |
|            | > purpose of immediate reenlistment without a DD 214    |
|            | > being issued                                          |
|            | >                                                       |
|            | > • Applicant was discharged or released from active    |
|            | > service with an actual break in service other than    |
|            | > final discharge                                       |
|            | >                                                       |
|            | > • Applicant on active duty has not had a break in     |
|            | > service                                               |
|            | >                                                       |
|            | > The statement of service:                             |
|            | >                                                       |
|            | > • Must be signed by, or at the direction of, the      |
|            | > adjutant or personnel officer or commanding officer   |
|            | > of the unit the applicant is assigned to              |
|            | >                                                       |
|            | > • Must indicate all active duty subsequent to that    |
|            | > covered by the last documented discharge or release,  |
|            | > and up to the date of the statement of service        |
|            | >                                                       |
|            | > • Must indicate any lost time                         |
|            | >                                                       |
|            | > • May be in letter form on military letterhead or     |
|            | > computer-generated                                    |
+------------+---------------------------------------------------------+
| GSA Form   | > In the absence of discharge or separation papers or a |
| 6954 or    | > statement of service, the following are acceptable:   |
| r          | >                                                       |
| eplacement | > • GSA Form 6954, Certification of Military Service    |
| discharge  |                                                         |
| c          | ♦ May be obtained by veteran\'s personal application to |
| ertificate | the service department concerned if an honorable        |
|            | discharge was originally issued                         |
|            |                                                         |
|            | > OR                                                    |
|            | >                                                       |
|            | > • Certificate in lieu of a lost or destroyed          |
|            | > discharge certificate                                 |
+------------+---------------------------------------------------------+

Continued on next page 2-49

M26-1, Revised September 16, 1996

2.13 How to Process Application and Issue COE or Denial, Continued

  -----------------------------------------------------------------------
  Acceptable Proof of Military Service (continued)

  -----------------------------------------------------------------------

+------------+---------------------------------------------------------+
| **         | **Specifics**                                           |
| Document** |                                                         |
+------------+---------------------------------------------------------+
| VA Form    | > If veteran\'s discharge or separation papers are not  |
| 21-3101    | > available, a properly authenticated VA Form 21-3101,  |
|            | > Request for Information, on file with VA, will        |
|            | > suffice.                                              |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| Duplicate  | > A duplicate COE will be issued only if the veteran    |
| COEs       | > certifies the previously issued COE has been lost or  |
|            | > stolen (item 7c of VA Form 26-1880) or mutilated.     |
|            | > Analysis of eligibility and entitlement must be       |
|            | > completed just as with other types of requests        |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| First,     | > Conduct a preliminary review of the information       |
| Review the | > provided on VA Form 26-1880 and the proof of military |
| Documents  | > service                                               |
| Received   | >                                                       |
|            | > • Ensure that the veteran\'s identifying information  |
|            | > is consistent on all documents submitted              |
|            |                                                         |
|            | ♦ Resolve any discrepancies                             |
|            |                                                         |
|            | ♦ Legal documentation must be provided to substantiate  |
|            | any name change                                         |
|            |                                                         |
|            | > • If the veteran did not sign and date VA Form        |
|            | > 26-1880, items 19 and 20, contact the veteran.        |
|            |                                                         |
|            | ♦ A signature must be obtained before processing can    |
|            | begin.                                                  |
|            |                                                         |
|            | > • If the veteran checked \"yes\" on item 6 of VA Form |
|            | > 26-1880, but did not enclose a COE, contact the       |
|            | > veteran and obtain the COE before processing          |
|            | >                                                       |
|            | > • Any necessary contact should be made by telephone   |
|            | > or other expedient means.                             |
|            |                                                         |
|            | ♦ When contact must be made, request that any other     |
|            | missing information discovered during the cursory       |
|            | review be provided at the same time                     |
|            |                                                         |
|            | > • If contact is by mail, use FL 26-284 to request     |
|            | > additional information                                |
|            | >                                                       |
|            | > • Annotate any corrections needed to VA Form 26-1880  |
|            | > on the form if and when errors are discovered.        |
+------------+---------------------------------------------------------+

Continued on next page

2-50

September 16, 1996 M26-1, Revised

2.13 How to Process Application and Issue COE or Denial, Continued

+------------+---------------------------------------------------------+
| Evaluate   | > Follow these procedures:                              |
| Basic      |                                                         |
| E          |                                                         |
| ligibility |                                                         |
+------------+---------------------------------------------------------+

+-------------+--------------------------------------------------------+
| **If**      | **Then**                                               |
+-------------+--------------------------------------------------------+
| Application | Assume basic eligibility requirements have been met.   |
| contains an |                                                        |
| existing    | except in the case of:                                 |
| COE or      |                                                        |
| records     | > • Veteran qualified under \"Still on Active Duty\"   |
| indicate    | > exception at the time of the previous COE            |
| that        | >                                                      |
| veteran had | > • Unremarried surviving spouse or spouse of MIA/POW  |
| a prior VA  | >                                                      |
| loan        | > In such cases, reevaluate eligibility in light of    |
|             | > subsequent events and/or current conditions.         |
+-------------+--------------------------------------------------------+
| There is no | Determine whether the applicant meets the General Rule |
| evidence of | for Eligibility or any of its exceptions, from items 4 |
| a prior COE | and 5 on VA Form 26-1880 and proof of military         |
| or VA loan  | service. In the case of a discrepancy, rely on the     |
|             | proof of service. Evaluate:                            |
|             |                                                        |
|             | • Length of Service                                    |
|             |                                                        |
|             | • Character of Service                                 |
|             |                                                        |
|             | If the documentation submitted is inadequate:          |
|             |                                                        |
|             | • Use BIRLS (Beneficiary Identification and Records    |
|             | Locator Subsystem)                                     |
|             |                                                        |
|             | ♦ Character of service \"HON\" and reason for          |
|             | separation \"SAT\" satisfies character of service      |
|             |                                                        |
|             | ♦ If either field is blank or \"UNK,\" use the MINQ    |
|             | command to extract information on any active           |
|             | Compensation, Pension or Education award that may      |
|             | establish eligibility. (Direct questions on MINQ to    |
|             | Veterans Services or the Adjudication Division.)       |
|             |                                                        |
|             | • If \"NO RECORD\" is found, request the veteran\'s    |
|             | claim folder from the station with jurisdiction, or    |
|             | the Records Processing Center (RPC) if the folder has  |
|             | been retired                                           |
|             |                                                        |
|             | • Only after these steps have been tried and have      |
|             | failed to produce adequate proof of service, suspend   |
|             | processing of the request and provide an SF 180 to the |
|             | veteran.                                               |
+-------------+--------------------------------------------------------+

Continued on next page 2-51

M26-1, Revised September 16, 1996

2.13 How to Process Application and Issue COE or Denial, Continued

+------------+---------------------------------------------------------+
| If         | > Determine whether applicant is eligible to receive a  |
| Applicant  | > Certificate of Veteran Status (Does not apply to      |
| is Not     | > cases involving restoration of entitlement)           |
| Eligible   | >                                                       |
|            | > • See Section 2.15, FHA Loans for Veterans -          |
|            | > Certificate of Veteran Status                         |
|            | >                                                       |
|            | > Advise applicant by letter, with reason for denial    |
|            | > cited.                                                |
|            | >                                                       |
|            | > • Use FL 26-611 when possible                         |
|            | >                                                       |
|            | > • If FL 26-611 is not used, attach VA Form 4107,      |
|            | > Notice of Procedural and Appellate Rights, to the     |
|            | > letter                                                |
|            | >                                                       |
|            | > • Return veteran\'s proof of military service to him  |
|            | > or her and complete section 21 of VA Form 26-1880     |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| Calculate  | > Use the \"Procedure for Calculating the Amount of     |
| Amount of  | > Entitlement\", Section 2.11 of this chapter.          |
| E          | >                                                       |
| ntitlement | > **[Always]{.underline}** check for prior usage of     |
| for        | > entitlement by:                                       |
| Eligible   | >                                                       |
| Applicants | > • Reviewing items 8 through 18 of VA Form 26-1880     |
|            | >                                                       |
|            | > AND                                                   |
|            | >                                                       |
|            | > • Checking the LGY Index system, or the nationwide    |
|            | > microfiche listing, Semiannual Alpha Listing of GIL   |
|            | > Records, COIN GIL 50-03B                              |
|            | >                                                       |
|            | > • [Annotate VA Form 26-1880]{.underline} to show the  |
|            | > LGY Index or microfiche has been checked and the      |
|            | > result, including loan number, loan date, guaranty    |
|            | > amount, and transaction code for any loan discovered  |
|            | >                                                       |
|            | > [Suspend processing in cases involving undisclosed    |
|            | > prior usage]{.underline} until satisfactory           |
|            | > clarification is obtained from the veteran or other   |
|            | > records                                               |
|            | >                                                       |
|            | > • Document follow-up processing actions and retain    |
|            | > with VA Form 26-1880 for future auditing purposes     |
|            | >                                                       |
|            | > • Veterans Benefits Counselors will refer \"walk-in\" |
|            | > applicants to Loan Guaranty personnel to resolve      |
|            | > undisclosed prior usage or inform applicants they     |
|            | > will be advised of a decision in writing, and refer   |
|            | > the case to Loan Guaranty                             |
|            | >                                                       |
|            | > • Personnel in satellite offices may forward the case |
|            | > to a regional office for further processing if the    |
|            | > discrepancy cannot be resolved on-site                |
+------------+---------------------------------------------------------+

Continued on next page

2-52

September 16, 1996 M26-1, Revised

2.13 How to Process Application and Issue COE or Denial, Continued

  -----------------------------------------------------------------------
  Calculate Amount of Entitlement for Eligible Applicants (continued)

  -----------------------------------------------------------------------

+------------+---------------------------------------------------------+
|            | > If there is evidence that a prior loan has been       |
|            | > foreclosed (code 48), verify whether the Government   |
|            | > has incurred a loss, and, if so, whether the loss has |
|            | > been paid in full. If the code 48 is accompanied by   |
|            | > an \"R,\" then entitlement was previously restored,   |
|            | > and no further inquiry is needed with regard to that  |
|            | > loan. In all other cases, follow these verification   |
|            | > steps:                                                |
+------------+---------------------------------------------------------+

+-------+--------------------------------------------------------------+
| **S   | **Action**                                                   |
| tep** |                                                              |
+-------+--------------------------------------------------------------+
| 1     | Review the loan file and C-file, if on-station, for evidence |
|       | of any loss to the Government on a prior loan and repayment  |
|       | of the loss.                                                 |
+-------+--------------------------------------------------------------+
| 2     | If another station has the loan file and/or C-file, request  |
|       | the station to review the file(s) for evidence of a loss to  |
|       | the Government and repayment of the loss.                    |
+-------+--------------------------------------------------------------+
| 3     | If the loan file has been sent to storage, recall it and     |
|       | review it for evidence of a loss to the Government and       |
|       | repayment of the loss. ([Note]{.underline}: Foreclosed loan  |
|       | files are normally destroyed after 10 years.)                |
+-------+--------------------------------------------------------------+
| 4     | If file review is unavailable or inconclusive, check other   |
|       | sources of information. These may include:                   |
|       |                                                              |
|       | • LCS for evidence of a claim paid                           |
|       |                                                              |
|       | • The MINQ screen for evidence of a debt                     |
|       |                                                              |
|       | • Debt Management Center for evidence of debt repayment.     |
+-------+--------------------------------------------------------------+
| 5     | If there is evidence that the Government incurred a loss, it |
|       | **MUST** be determined that the loss has been paid in full   |
|       | **[before]{.underline}** restoration is possible.            |
|       |                                                              |
|       | > Do not rely on:                                            |
|       | >                                                            |
|       | > • VA Form 20-6560 as proof that no unpaid loss exists      |
|       |                                                              |
|       | • VA Form 26-8937 as proof that no unpaid loss exists.       |
+-------+--------------------------------------------------------------+
| 6     | Restore the entitlement tied to the foreclosed loan          |
|       | **only**:                                                    |
|       |                                                              |
|       | • If it is **not possible** to confirm a loss to the         |
|       | Government after applying **[ALL]{.underline}** of the above |
|       | steps                                                        |
|       |                                                              |
|       | **[OR]{.underline}**                                         |
|       |                                                              |
|       | • If there is confirmation that                              |
|       |                                                              |
|       | ♦ There was **no** loss                                      |
|       |                                                              |
|       | OR                                                           |
|       |                                                              |
|       | ♦ The loss has been **paid in full**.                        |
+-------+--------------------------------------------------------------+

Continued on next page 2-53

M26-1, Revised September 16, 1996

2.13 How to Process Application and Issue COE or Denial, Continued

  -----------------------------------------------------------------------
  Calculate Amount of Entitlement for Eligible Applicants (continued)

  -----------------------------------------------------------------------

+-------+--------------------------------------------------------------+
| **S   | **Action**                                                   |
| tep** |                                                              |
+-------+--------------------------------------------------------------+
| 6     | > Remember that even if no debt was established or a debt    |
| (c    | > was waived or compromised or discharged in bankruptcy,     |
| onti- | > [any loss to the Government resulting from prior use of    |
| nued) | > entitlement must be repaid]{.underline} before restoration |
|       | > of entitlement is allowable.                               |
+-------+--------------------------------------------------------------+

+------------+---------------------------------------------------------+
|            | > **[NOTE]{.underline}:** **FAILURE TO THOROUGHLY CHECK |
|            | > FOR A LOSS BEFORE RESTORING ENTITLEMENT CAN RESULT IN |
|            | > ERRORS WHICH ARE DIFFICULT TO RESOLVE WHEN DISCOVERED |
|            | > LATER. ALWAYS EXERCISE DILIGENCE WHEN RESEARCHING A   |
|            | > POSSIBLE LOSS.**                                      |
|            | >                                                       |
|            | > If [undisclosed usage]{.underline} is found in a case |
|            | > involving a [prior approval loan]{.underline},        |
|            | >                                                       |
|            | > advise the lender of the reduction in available       |
|            | > entitlement prior to issuance                         |
|            | >                                                       |
|            | > of the commitment if the reduction in entitlement     |
|            | > will result in less than 25                           |
|            | >                                                       |
|            | > percent guaranty on the loan                          |
|            | >                                                       |
|            | > • If the loan application is rejected, update the COE |
|            | > to reflect the correct amount of available            |
|            | > entitlement and note the reduction in available       |
|            | > entitlement on the lender\'s notice of the loan       |
|            | > denial in case of a future reconsideration of the     |
|            | > loan application                                      |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| Select COE | > When an existing COE is furnished by the veteran,     |
| Form       | > generally just                                        |
|            | >                                                       |
|            | > update the existing form. When there is no existing   |
|            | > COE or it is necessary                                |
|            | >                                                       |
|            | > to use a new form, refer to the following chart for   |
|            | > forms currently and                                   |
|            | >                                                       |
|            | > previously used as COEs and the proper circumstances  |
|            | > for their use.                                        |
+------------+---------------------------------------------------------+

  -------------------------- --------------------------------------------
  **VA Form**                **Use**

  26-8320, Certificate of    Use for all eligible veterans and spouses
  Eligibility for Loan       [except]{.underline} those eligible only
  Guaranty Benefits          under the 6-year require-ment for Selected
                             Reserve or Guard members

  26-8320a, Certificate of   Use for veterans eligible only under the
  Eligibility for Loan       6-year requirement for Selected Reserve or
  Guaranty Benefits          Guard members
  (Reserves/National Guard)  
  -------------------------- --------------------------------------------

2-54

Continued on next page

September 16, 1996 M26-1, Revised

2.13 How to Process Application and Issue COE or Denial, Continued

  -----------------------------------------------------------------------
  Select COE Form (continued)

  -----------------------------------------------------------------------

  -------------------------- --------------------------------------------
  **VA Form**                **Use**

  26-8320-1, Certificate of  This form was **discontinued**. Destroy any
  Eligibility for Home,      received by the station. Issue VA Form
  Condominium and            26-8320 to the veteran instead, if
  Manufactured Home Loans    appropriate.

  26-1870, Certificate of    This form was discontinued. It was
  Eligibility                previously used for World War II and Korean
                             War veterans. A previously issued 26-1870
                             may be updated and continued in use.
  -------------------------- --------------------------------------------

+------------+---------------------------------------------------------+
| Storage of | > Store the following documents in locked filing        |
| Blank COE  | > equipment of the type described in paragraph 3.05 of  |
| Forms      | > M26-3 in a location remote from public access:        |
|            | >                                                       |
|            | > • Blank and canceled VA Forms 26-8320 and 26-8320a    |
|            | >                                                       |
|            | > • Discharge papers if they are not returned           |
|            | > immediately to the sender                             |
|            | >                                                       |
|            | > • All COEs and files on which work is not completed   |
|            | > by the eligibility clerk at the end of the day.       |
|            | >                                                       |
|            | > Limit access to employees authorized to issue COEs.   |
|            | > Furnish samples of the forms upon written request     |
|            | > only if they are conspicuously marked \"VOID\" or     |
|            | > \"CANCELED\" in letters not less than one inch high   |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| Complete   | > Complete the items on the COE as described in the     |
| the COE    | > following chart. When updating an existing COE,       |
|            | > verify only the information previously entered that   |
|            | > may have been affected by subsequent events.          |
+------------+---------------------------------------------------------+

+-----------+----------------------------------------------------------+
| **        | **Instructions**                                         |
| Item(s)** |                                                          |
+-----------+----------------------------------------------------------+
| Service   | Use that applicable to the latest period of active       |
| Serial    | service from which entitlement has been derived, as      |
| Number    | verified by proof of military service.                   |
| and       |                                                          |
| Branch of | Enter both the social security number and the service    |
| Service   | number, if different.                                    |
+-----------+----------------------------------------------------------+

Continued on next page 2-55

M26-1, Revised September 16, 1996

2.13 How to Process Application and Issue COE or Denial, Continued

  -----------------------------------------------------------------------
  Complete the COE (continued)

  -----------------------------------------------------------------------

+-----------+----------------------------------------------------------+
| **        | **Instructions**                                         |
| Item(s)** |                                                          |
+-----------+----------------------------------------------------------+
| En        | Use the separation, effective, or discharge date to      |
| titlement | determine the code as follows:                           |
| Code      |                                                          |
|           | 01 World War II                                          |
|           |                                                          |
|           | 02 Korean War                                            |
|           |                                                          |
|           | 03 Post-Korean                                           |
|           |                                                          |
|           | 04 Vietnam War                                           |
|           |                                                          |
|           | 05 Entitlement Restored                                  |
|           |                                                          |
|           | 06 Unremarried Surviving Spouse                          |
|           |                                                          |
|           | 07 Spouse of POW/MIA                                     |
|           |                                                          |
|           | 08 Post-World War II                                     |
|           |                                                          |
|           | 09 Post-Vietnam                                          |
|           |                                                          |
|           | 10 Persian Gulf War                                      |
|           |                                                          |
|           | 11 Selected Reserve                                      |
+-----------+----------------------------------------------------------+
| Active    | Check block which requires certification of continuous   |
| Duty      | active duty for veterans who:                            |
| Certi     |                                                          |
| fica-tion | • Are eligible under the \"still on active duty\"        |
| (first    | exception to the 2-Year Requirement of the General Rule  |
| item with | for Eligibility                                          |
| block for |                                                          |
| ch        | OR                                                       |
| eck-mark) |                                                          |
|           | • Have met length of service requirements under the      |
|           | General Rule for Eligibility, the 2-Year Requirement, or |
|           | the 6-Year Requirement for Reserves/National Guard, but  |
|           | are still on active duty and have never received a       |
|           | discharge evidencing qualifying service of the required  |
|           | duration.                                                |
|           |                                                          |
|           | ♦ Certification is needed because the veteran could      |
|           | become ineligible at a future date if he or she receives |
|           | a nonqualifying discharge.                               |
+-----------+----------------------------------------------------------+
| Re        | Check the second block and enter the loan number of the  |
| storation | existing VA loan on the property when restoration is     |
| Based on  | being granted under refinance conditions.                |
| Refinance |                                                          |
+-----------+----------------------------------------------------------+

Continued on next page 2-56

September 16, 1996 M26-1, Revised

2.13 How to Process Application and Issue COE or Denial, Continued

  -----------------------------------------------------------------------
  Complete the COE (continued)

  -----------------------------------------------------------------------

+-----------+----------------------------------------------------------+
| **        | **Instructions**                                         |
| Item(s)** |                                                          |
+-----------+----------------------------------------------------------+
| Manu      | Check the third block if there are any manufactured home |
| fac-tured | loans outstanding to which any of the veteran\'s         |
| Home      | entitlement is tied. Reduce the maximum of \$20,000 by   |
|           | the amount of entitlement used on such outstanding loans |
| (third    | and enter the result.                                    |
| and       |                                                          |
| fourth    | Check the fourth block if veteran has not disposed of    |
| items     | any manufactured home purchased with VA entitlement and  |
| with      | enter the loan number.                                   |
| block for |                                                          |
| ch        |                                                          |
| eck-mark) |                                                          |
+-----------+----------------------------------------------------------+
| One Time  | Check the fifth block when restoration is being granted  |
| Re        | under one time only conditions. Enter the loan number of |
| storation | the paid in full loan on the property not yet disposed   |
|           | of.                                                      |
+-----------+----------------------------------------------------------+
| Available | Enter the amount of available entitlement calculated.    |
| En        | Date and initial the entry.                              |
| titlement |                                                          |
|           | Upon issuance of evidence of guaranty, enter the current |
| (middle   | loan number, the amount of entitlement used, and the     |
| section   | resultant available entitlement. Date and initial the    |
| of form)  | entry.                                                   |
|           |                                                          |
|           | Adjust the amount of available entitlement on a COE any  |
|           | time it is discovered that:                              |
|           |                                                          |
|           | • An error was made on a prior calculation               |
|           |                                                          |
|           | • Causes for available entitlement being less than the   |
|           | maximum on an existing COE have been removed (e.g. loss  |
|           | repaid)                                                  |
|           |                                                          |
|           | • The maximum entitlement has been changed by statute    |
|           | since the existing COE was issued or last updated        |
|           |                                                          |
|           | ♦ VA will not solicit requests for updated COEs when a   |
|           | change in the maximum occurs                             |
|           |                                                          |
|           | • VA incurred an actual loss or liability on a loan to   |
|           | which a conditional COE related (see below)              |
+-----------+----------------------------------------------------------+

Continued on next page 2-57

M26-1, Revised September 16, 1996

2.13 How to Process Application and Issue COE or Denial, Continued

  -----------------------------------------------------------------------
  Complete the COE (continued)

  -----------------------------------------------------------------------

+-----------+----------------------------------------------------------+
| **        | **Instructions**                                         |
| Item(s)** |                                                          |
+-----------+----------------------------------------------------------+
| Special   | > Type or stamp special clauses on the face of the COE   |
| Clauses   | > for the following:                                     |
|           | >                                                        |
|           | > • Unremarried surviving spouse of veteran who died     |
|           | > while in service or from a service-connected           |
|           | > disability (Section 2.05, \"Special Procedures\"       |
|           | > heading)                                               |
|           | >                                                        |
|           | > • Spouse of serviceperson missing in action or         |
|           | > prisoner of war (Section 2.06, \"Special Procedures\"  |
|           | > heading)                                               |
|           | >                                                        |
|           | > • If the COE being issued is a duplicate, prominently  |
|           | > mark \"DUPLICATE\" on the upper center face of the COE |
+-----------+----------------------------------------------------------+
| Dis       | > Do not make any notation on the COE to reflect the     |
| ap-proved | > disapproval, cancellation, or withdrawal of a loan     |
| Loan      | > application. Only loans actually guaranteed, insured,  |
|           | > or made by VA should be evidenced on the COE.          |
+-----------+----------------------------------------------------------+

+------------+---------------------------------------------------------+
| Retention  | > When a Certificate of Commitment is issued, retain    |
| of COE     | > the COE in the loan file until evidence of guaranty   |
| When Prior | > is issued or the case is canceled or withdrawn.       |
| Approval   |                                                         |
| Loan       |                                                         |
| Pending    |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| Issuance   | > [In all cases]{.underline}, send the new or updated   |
| of COE     | > COE to the address indicated in item 22 of VA Form    |
|            | > 26-1880, or to the veteran if no other address has    |
|            | > been designated                                       |
|            | >                                                       |
|            | > • Attach the veteran\'s discharge and/or separation   |
|            | > papers to the COE                                     |
|            | >                                                       |
|            | > • If an original or certified true copy is involved,  |
|            | > make a copy and return the original to the veteran.   |
|            |                                                         |
|            | ♦ Annotate the copy to reflect it is a true copy of the |
|            | original or certified copy and route it to              |
|            | \"Adjudicator\" for a BIRLS update (Optional Form 41    |
|            | may be used for this purpose)                           |
|            |                                                         |
|            | > • Complete section 21 of VA Form 26-1880              |
+------------+---------------------------------------------------------+

2-58

Continued on next page

February 4, 1998 M26-1, Revised

Change 3

2.13 How to Process Application and Issue COE or Denial, Continued

  -----------------------------------------------------------------------
  Issuance of COE (continued)

  -----------------------------------------------------------------------

+------------+---------------------------------------------------------+
|            | > [For veterans who have not previously obtained a VA   |
|            | > guaranteed loan]{.underline} (and who are not just    |
|            | > requesting a duplicate COE), send the following       |
|            | > additional items:                                     |
|            | >                                                       |
|            | > • VA Pamphlets 26-4, 26-6, and 26-71-1                |
|            | >                                                       |
|            | > • VA Form 26-8952, Notice to the Homebuying Veteran   |
|            | >                                                       |
|            | > • VA Form 26-0593, Important Information for          |
|            | > Homebuyers                                            |
|            | >                                                       |
|            | > [Also, for disposition of the COE upon issuance of    |
|            | > guaranty]{.underline}:                                |
|            | >                                                       |
|            | > • Ensure the new loan number, amount of entitlement   |
|            | > used, available entitlement, as well as date and      |
|            | > initials have been entered on the COE                 |
|            | >                                                       |
|            | > \[ \]                                                 |
|            | >                                                       |
|            | > AND                                                   |
|            | >                                                       |
|            | > • Send the following additional items to the veteran: |
|            |                                                         |
|            | ♦ FL 26-589                                             |
|            |                                                         |
|            | ♦ VA Form 26-8978, Important Notice - Rights of VA Loan |
|            | Borrowers                                               |
|            |                                                         |
|            | ♦ VA Pamphlet 26-5                                      |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| Issuance   | > Veterans Benefits Counselors (VBCs) may process       |
| of COEs by | > requests received by the Loan Guaranty Service or     |
| Veterans   | > directly and issue the COE and appropriate pamphlets  |
| Benefits   | > ONLY if:                                              |
| Counselors | >                                                       |
| (VBC)      | > • VA Form 26-1880 is completed and accompanied by     |
|            | > proof of required military service or such service    |
|            | > can be confirmed through VA records.                  |
|            | >                                                       |
|            | > • The veteran has not previously used loan guaranty   |
|            | > entitlement                                           |
|            | >                                                       |
|            | > • The discharge does not show service as a            |
|            | > conscientious objector                                |
|            | >                                                       |
|            | > • The veteran was not issued an upgraded discharge    |
|            | > under Presidential Proclamation 4313 of 9/16/74, the  |
|            | > Presidential Memorandum of 1/19/77, or the Department |
|            | > of Defense Special Discharge Review Program           |
|            | >                                                       |
|            | > If the above requirements are not met, the VBC will   |
|            | > forward the request or                                |
|            | >                                                       |
|            | > refer the veteran to the Loan Guaranty function for   |
|            | > the jurisdiction.                                     |
|            | >                                                       |
|            | > VBCs may also update COEs to reflect statutory        |
|            | > increases or deletions of                             |
|            | >                                                       |
|            | > entitlement.                                          |
+------------+---------------------------------------------------------+

Continued on next page

2-59

M26-1, Revised February 4, 1998

Change 3

2.13 How to Process Application and Issue COE or Denial, Continued

  -----------------------------------------------------------------------
  Issuance of COEs by Veterans Benefits Counselors (VBC) (continued)

  -----------------------------------------------------------------------

+------------+---------------------------------------------------------+
|            | > For all COEs issued by a VBC, the VBC must complete   |
|            | > section 21 of VA Form 26-1880 and forward the form to |
|            | > the Loan Guaranty Division for filing and disposition |
|            | > in accordance with RCS VB-1, part I, item 12‑060.000. |
|            | >                                                       |
|            | > The Statistical Quality Control (SQC) provisions of   |
|            | > M26-9, chapter 3, will                                |
|            | >                                                       |
|            | > be applied to VBC eligibility determinations because  |
|            | > most are on a walk-in                                 |
|            | >                                                       |
|            | > basis.                                                |
|            | >                                                       |
|            | > • Stations may determine locally the criteria and     |
|            | > method for selecting walk-in cases on a random        |
|            | > sampling basis to be quality reviewed in accordance   |
|            | > with Quality Criteria Schedule 211.                   |
|            | >                                                       |
|            | > • The estimated volume of walk-in cases will be       |
|            | > included in computing the maximum monthly             |
|            | > requirements as provided in chapter 2 of M26-9        |
|            | >                                                       |
|            | > • The number of cases to be reviewed will be          |
|            | > proportionate to VAS\'s share in the total number of  |
|            | > eligibility determinations made by the station in a   |
|            | > given month.                                          |
|            |                                                         |
|            | ♦ For example, if 20% of the total determinations are   |
|            | walk-ins and the maximum monthly SQC requirement for    |
|            | the station is 10 cases, 2 of the walk-ins must be      |
|            | reviewed.                                               |
|            |                                                         |
|            | > • The maximum review requirement for cases selected   |
|            | > from the quality control register may be reduced by a |
|            | > like number.                                          |
|            | >                                                       |
|            | > • When walk-in cases are selected for quality review, |
|            | > all documents must be photocopied, including the      |
|            | > completed COE, before it is given to the veteran, and |
|            | > forwarded to Loan Guaranty for quality review.        |
|            | >                                                       |
|            | > • These quality control procedures apply to outbased  |
|            | > VBCs also.                                            |
|            | >                                                       |
|            | > Stations must provide Veterans Benefits Counselors    |
|            | > (VBCs) with all information necessary to make         |
|            | > eligibility determinations and with ongoing training. |
|            | > At a minimum, Loan Guaranty will conduct annual       |
|            | > training sessions with VBCs and any other station     |
|            | > personnel responsible for issuing COEs. VA Form 3913, |
|            | > Training Course Record, will be maintained by VAS or  |
|            | > Loan Guaranty.                                        |
+------------+---------------------------------------------------------+

#### 2-60 

September 16, 1996 M26-1, Revised

2.14 How to Process Veteran\'s Appeal of an Eligibility Denial

+------------+---------------------------------------------------------+
| How is an  | > VA advises the applicant of denial by letter, with    |
| Appeal     | > the reason for denial cited, using FL 26-611 or VA    |
| Initiated? | > Form 4107, Notice of Procedural and Appellate Rights. |
|            | >                                                       |
|            | > • Use FL 26-592 for a denial of Certificate of        |
|            | > Veteran Status (FHA)                                  |
|            | >                                                       |
|            | > The veteran\'s appeal is initiated when he or she     |
|            | > files a [written notice of disagreement]{.underline}  |
|            | > that is received or postmarked [within the applicable |
|            | > time limit]{.underline}.                              |
|            | >                                                       |
|            | > The notice of disagreement:                           |
|            | >                                                       |
|            | > • Must clearly indicate a desire for appellate review |
|            | >                                                       |
|            | > • Need not contain any specific language or           |
|            | > allegations of error of fact or law                   |
|            | >                                                       |
|            | > • Is not a mere inquiry or general complaint          |
|            |                                                         |
|            | ♦ If such inquiry is received, advise applicant that    |
|            | the time limit for filing a notice of disagreement will |
|            | not be extended                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| How to     | > The division that made the decision will process any  |
| Begin      | > timely appeal (Loan                                   |
| Processing | >                                                       |
| an Appeal  | > Guaranty or Adjudication) by following these steps:   |
|            | >                                                       |
|            | > • Review or develop the facts as needed               |
|            |                                                         |
|            | ♦ If this does not result in granting eligibility or    |
|            | the applicant withdrawing the notice of disagreement,   |
|            | then                                                    |
|            |                                                         |
|            | > • Prepare a statement of the case in accordance with  |
|            | > 38 CFR 19.119                                         |
|            | >                                                       |
|            | > • Send the statement of the case to the applicant and |
|            | > representative, if any, using FL 1-25 and VA Form 9,  |
|            | > Appeal to Board of Veterans Appeals                   |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| How to     | > If applicant files an appeal on VA Form 9 or its      |
| Process an | > equivalent in                                         |
| Appeal to  | >                                                       |
| the Board  | > correspondence,                                       |
| of         | >                                                       |
| Veterans   | > • Arrange a hearing at the station, if requested,     |
| Appeals    | > prior to certifying the case to the Board             |
|            | >                                                       |
|            | > • If there is still no resolution, certify the case   |
|            | > to the Board with all supporting documentation        |
|            | >                                                       |
|            | > For further details see M21-1, part IV, chapter 8,    |
|            | > and 38 CFR Part 19                                    |
|            | >                                                       |
|            | > The Board of Veterans Appeals will notify the         |
|            | > applicant and representative                          |
|            | >                                                       |
|            | > of its decision                                       |
+------------+---------------------------------------------------------+

Continued on next page 2-61

M26-1, Revised September 16, 1996

2.14 How to Process Veteran\'s Appeal of an Eligibility Denial,
Continued

+------------+---------------------------------------------------------+
| FHA-VA     | > Generally, a determination by VA for FHA loan         |
| Benefit    | > purposes will [not]{.underline} affect a claimant\'s  |
| Decisions  | > right with respect to a subsequent claim for a VA     |
|            | > benefit, and conversely, a VA determination for VA    |
|            | > benefit purposes will [not]{.underline} affect the    |
|            | > right to appeal a subsequent VA determination for FHA |
|            | > loan purposes.                                        |
|            | >                                                       |
|            | > The right of appeal is extended to every denial of a  |
|            | > Certificate of Veteran Status and the effect, if any, |
|            | > of a prior determination for different benefit        |
|            | > purposes will be decided by the Board of Veterans     |
|            | > Appeals                                               |
+------------+---------------------------------------------------------+

2.15 FHA Loans for Veterans - Certificate of Veteran Status

+-----------+----------------------------------------------------------+
| What is   | > Certain veterans can obtain slightly better FHA        |
| the       | > mortgage financing terms than non-veterans. VA         |
| Program?  | > evaluates a veteran\'s eligibility for the FHA program |
|           | > and                                                    |
|           | >                                                        |
|           | > issues VA Form 26-8261, Certificate of Veteran Status, |
|           | > to FHA-eligible veterans.                              |
+-----------+----------------------------------------------------------+

+------------+---------------------------------------------------------+
| FHA        | > Determine eligibility to receive a Certificate of     |
| E          | > Veteran Status by applying the VA General Rule for    |
| ligibility | > Eligibility and its Exceptions, with the following    |
|            | > differences:                                          |
+------------+---------------------------------------------------------+

+----------+-----------------------------------------------------------+
| **Area   | **FHA Requirement**                                       |
| of       |                                                           |
| Diff     |                                                           |
| erence** |                                                           |
+----------+-----------------------------------------------------------+
| 90       | > For FHA, the active duty requirement is [90 or more     |
| co       | > continuous days, with no distinction between wartime or |
| ntinuous | > peacetime]{.underline}. Two or more types of duty may   |
| days (No | > be combined in length only if there was no intervening  |
| 181      | > break in service.                                       |
| days)    |                                                           |
+----------+-----------------------------------------------------------+
| 2-Year   | The 2-Year Requirement of the General Rule for            |
| Requ     | Eligibility applies to FHA as well as VA, with 2          |
| ire-ment | differences:                                              |
|          |                                                           |
|          | • For FHA there is a [different cutoff date for           |
|          | Reservists]{.underline} - if their active duty began on   |
|          | or after 10/14/82, the 2-Year Requirement applies to      |
|          | Reservists/Guards                                         |
|          |                                                           |
|          | > • For FHA, the full period for which ordered to active  |
|          | > duty must be at least [90 or more continuous days, with |
|          | > no distinction between wartime or                       |
|          | > peacetime]{.underline}.                                 |
+----------+-----------------------------------------------------------+

2-62

Continued on next page

September 16, 1996 M26-1, Revised

2.15 FHA Loans for Veterans - Certificate of Veteran Status Continued

  -----------------------------------------------------------------------
  FHA Eligibility (continued)

  -----------------------------------------------------------------------

+----------+-----------------------------------------------------------+
| **Area   | **FHA Requirement**                                       |
| of       |                                                           |
| Diff     |                                                           |
| erence** |                                                           |
+----------+-----------------------------------------------------------+
| Extra-h  | For FHA, [less than 90 days]{.underline} will satisfy the |
| azardous | length of service requirement [if]{.underline} the        |
| Duty     | Secretary of Defense certifies that the veteran performed |
|          | [extrahazardous duty]{.underline}.                        |
+----------+-----------------------------------------------------------+
| If Still | > FHA requires that the veteran has been discharged or    |
| on       | > released under conditions other than dishonorable.      |
| Active   | > [Persons still on active duty who have had no break in  |
| Duty,    | > service are ineligible]{.underline}. Satisfactory       |
| Must     | > evidence of discharge or release such as an original    |
| Have Had | > discharge certificate or legible photostat of the       |
| Break in | > discharge certificate MUST be obtained.                 |
| Service  |                                                           |
|          | [Persons currently on active duty who were                |
|          | previously]{.underline}                                   |
|          |                                                           |
|          | [discharged and had a break in service can                |
|          | qualify]{.underline}. However:                            |
|          |                                                           |
|          | • Persons discharged for the purpose of immediate         |
|          | reenlistment or to accept a commission without a break in |
|          | service qualify only if a discharge certificate is        |
|          | presented.                                                |
|          |                                                           |
|          | • Graduation and commissioning of a cadet or midshipman   |
|          | does not constitute a discharge or release.               |
|          |                                                           |
|          | > VA Form 26-8261a, Request for Certificate of Veteran    |
|          | > Status, asks:                                           |
|          |                                                           |
|          | 1\. Are you now on active duty?                           |
|          |                                                           |
|          | 2\. Were you on active military duty on the day following |
|          | the date of separation indicated in the papers submitted? |
|          |                                                           |
|          | • If both questions are answered yes, applicant is        |
|          | ineligible                                                |
|          |                                                           |
|          | • If both are no, request that the veteran submit proof   |
|          | of actual discharge or release from active service        |
|          |                                                           |
|          | > • If the first is no and the second yes, applicant is   |
|          | > ineligible unless he or she submits an honorable        |
|          | > discharge certificate or other proof of qualifying      |
|          | > discharge or release                                    |
+----------+-----------------------------------------------------------+
| Reserve  | Reserve and Guard members must perform active duty which  |
| and      | qualifies them under the General Rule for Eligibility.    |
| Guard    | Unlike VA eligibility, FHA has [no provision for          |
| Members  | qualifying through 6 years of membership]{.underline}.    |
|          | Also, the 2-Year Requirement of the General Rule is       |
|          | effective for Reserve and Guard members who entered on    |
|          | active duty on or after 10/14/82.                         |
+----------+-----------------------------------------------------------+

Continued on next page 2-63

M26-1, Revised September 16, 1996

2.15 FHA Loans for Veterans - Certificate of Veteran Status Continued

  -----------------------------------------------------------------------
  FHA Eligibility (continued)

  -----------------------------------------------------------------------

+----------+-----------------------------------------------------------+
| **Area   | **FHA Requirement**                                       |
| of       |                                                           |
| Diff     |                                                           |
| erence** |                                                           |
+----------+-----------------------------------------------------------+
| Active   | [Active duty for training (ACUTRA or ADTNG) is considered |
| Duty for | active duty]{.underline} for purposes of applying the     |
| Training | General Rule for Eligibility to FHA eligibility and       |
|          | calculating length of active duty service.                |
+----------+-----------------------------------------------------------+
| Ex       | The following [Exceptions]{.underline} which confer       |
| ceptions | eligibility under the VA program [do not confer           |
|          | eligibility]{.underline} for FHA purposes:                |
|          |                                                           |
|          | • Certain [unremarried surviving spouses]{.underline}     |
|          |                                                           |
|          | • Persons who served with [allied countries in World War  |
|          | II]{.underline}                                           |
|          |                                                           |
|          | • Veteran discharged or released for a [service-connected |
|          | disability]{.underline}                                   |
+----------+-----------------------------------------------------------+
| Resigned | An officer who resigned from the service \"for the good   |
| Officers | of the service\" is ineligible for the FHA program. For   |
|          | the VA program, submit the case to Adjudication for       |
|          | determination.                                            |
+----------+-----------------------------------------------------------+

+------------+---------------------------------------------------------+
| A          | > VA Form 26-8261a, Request for Certificate of Veteran  |
| pplication | > Status                                                |
| Forms and  | >                                                       |
| Doc        | > Discharge or separation papers showing \"other than   |
| umentation | > dishonorable\" qualifying active duty                 |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| How to     | > FHA eligibility determinations must be done by Loan   |
| Process    | > Guaranty personnel.                                   |
| the        | >                                                       |
| A          | > • Only basic eligibility is relevant to the FHA       |
| pplication | > program. The concept of entitlement or amount of      |
|            | > entitlement does not come into play.                  |
|            | >                                                       |
|            | > • See the section entitled \"How to Process           |
|            | > Applications\" for basic information on reviewing     |
|            | > documents submitted and use of BIRLS, keeping in mind |
|            | > the differences between VA and FHA requirements       |
|            | >                                                       |
|            | > When a veteran applies for a Certificate of Veteran   |
|            | > Status in-person                                      |
|            | >                                                       |
|            | > • Request that the veteran complete VA Form 26-1880   |
|            | >                                                       |
|            | > • Evaluate eligibility under both the VA and FHA      |
|            | > programs                                              |
|            | >                                                       |
|            | > • Issue both types of certificate if eligible for     |
|            | > both programs, unless the veteran requests otherwise. |
+------------+---------------------------------------------------------+

2-64

Continued on next page

September 16, 1996 M26-1, Revised

2.15 FHA Loans for Veterans - Certificate of Veteran Status Continued

  -----------------------------------------------------------------------
  How to Process the Application (continued)

  -----------------------------------------------------------------------

+------------+---------------------------------------------------------+
|            | > When a veteran applies only for VA eligibility using  |
|            | > VA Form 26-1880 and is found to be ineligible for VA  |
|            | > home loan benefits, and no restoration of entitlement |
|            | > is involved:                                          |
|            | >                                                       |
|            | > • [Evaluate eligibility for a Certificate of Veteran  |
|            | > Status]{.underline}                                   |
|            | >                                                       |
|            | > • No development of additional information should be  |
|            | > done in such cases                                    |
|            |                                                         |
|            | ♦ FHA eligibility must be evident from the documents    |
|            | provided                                                |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| How to     | > Issue VA Form 26-8261, Certificate of Veteran Status  |
| Issue the  | >                                                       |
| C          | > • Use the tear-off portion of VA Form 26-8261a as a   |
| ertificate | > cover letter                                          |
|            | >                                                       |
|            | > • Sign the item entitled \"Date Certificate of        |
|            | > Veteran Status Issued\" on VA Form 26-8261a           |
|            | >                                                       |
|            | > • Complete the portion of VA Form 26-8261a which      |
|            | > indicates disposition of service documents            |
|            | >                                                       |
|            | > If applicant applied for VA loan benefits using VA    |
|            | > Form 26-1880, but was found eligible only for FHA     |
|            | > benefits                                              |
|            | >                                                       |
|            | > • Use FL 26-611 with appropriate items checked to     |
|            | > send the veteran the Certificate of Veteran Status    |
|            | > and his or her proof of military service              |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| Duplicate  | > Unlike a VA COE, a Certificate of Veteran Status may  |
| Ce         | > be issued to a veteran who has previously received    |
| rtificates | > one or more of either type of certificate.            |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| If         | > Notify applicant using FL 26-592                      |
| Applicant  | >                                                       |
| is Not     | > • If application was submitted by a lender, send a    |
| Eligible   | > copy of the disapproval letter to the applicant       |
+------------+---------------------------------------------------------+

Continued on next page 2-65

M26-1, Revised September 16, 1996

2.15 FHA Loans for Veterans - Certificate of Veteran Status Continued

+------------+---------------------------------------------------------+
| D          | > Individual files will not be documented or created to |
| isposition | > reflect action on a request for a Certificate of      |
| of Records | > Veteran Status                                        |
|            | >                                                       |
|            | > The station will maintain a file of VA Forms 26-8261a |
|            | > in chronological order so the total number of cases   |
|            | > processed each month can be determined                |
|            | >                                                       |
|            | > • Include in the file copies of VA Form 26-1880 with  |
|            | > FL 26-611 attached in the case of Certificates of     |
|            | > Veteran Status issued from VA Forms 26-1880           |
|            | >                                                       |
|            | > • See RCS VB-1, part I, item No. 12-060.000 for       |
|            | > disposition requirements                              |
+------------+---------------------------------------------------------+

2-66

May 5, 1997 M26-1, Revised

Change 1

**\[ Exhibit 2-A Quick Reference Table for VA Eligibility**

+-----------------------+-----------------------+-----------------------+
| **ERA**               | **DATES**             | **TIME REQUIRED**     |
+-----------------------+-----------------------+-----------------------+
| **WWII**              | **9/16/40-7/25/47**   | **90 days**           |
+-----------------------+-----------------------+-----------------------+
| **POST WW II**        | **7/26/47-6/26/50**   | **181 days**          |
+-----------------------+-----------------------+-----------------------+
| **KOREAN**            | **6/27/50-1/31/55**   | **90 days**           |
+-----------------------+-----------------------+-----------------------+
| **POST KOREAN**       | **2/1/55-8/4/64**     | **181 days**          |
+-----------------------+-----------------------+-----------------------+
| **VIETNAM**           | **8/5/64\*-5/7/75**   | **90 days**           |
+-----------------------+-----------------------+-----------------------+
| **POST VIETNAM**      | **5/8/75 -- 9/7/80**  | **Enlisted -- 181     |
|                       |                       | days**                |
|                       | **5/8/75 --           |                       |
|                       | 10/16/81**            | **Officers -- 181     |
|                       |                       | days**                |
|                       | **9/8/80 -- 8/1/90**  |                       |
|                       |                       | **Enlisted -- 2       |
|                       | **10/17/81 --         | years\*\***           |
|                       | 8/1/90**              |                       |
|                       |                       | **Officers -- 2       |
|                       |                       | years\*\***           |
+-----------------------+-----------------------+-----------------------+
| **PERSIAN GULF**      | **8/2/90 -- present** | **2 years\*\***       |
+-----------------------+-----------------------+-----------------------+

**\*The Vietnam Era began 2/28/61 for those individuals who served in
the Republic of Vietnam.**

**\*\*The veteran must have served 2 yeas or the full period which
called or ordered to active duty (at least 90 days during wartime and
181 during peacetime.)**

+-----------------------------------+-----------------------------------+
| **OTHER ELIGIBLE PERSONS**        | **TIME REQUIRED**                 |
+-----------------------------------+-----------------------------------+
| **ACTIVE DUTY MEMBER\*\*\***      | **90 days (181 during             |
|                                   | peacetime)**                      |
+-----------------------------------+-----------------------------------+
| **RESERVES/GUARD**                | **6 years in Selected Reserves**  |
+-----------------------------------+-----------------------------------+
| **UNREMARRIED SURVIVING**         | **No time requirement. Veteran    |
|                                   | must have died on active duty or  |
| **SPOUSES**                       | from a service-connected          |
|                                   | disability.**                     |
+-----------------------------------+-----------------------------------+
| **POW/MIA SPOUSES**               | **Veteran must have been POW or   |
|                                   | MIA 90 days.**                    |
+-----------------------------------+-----------------------------------+

**\*\*\* Certificate only valid while veteran remains on active
duty.\]**