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Veterans Mortgage Life Insurance

Reprinted from PN January 2010

Veterans Mortgage Life Insurance provides coverage on the home mortgage of certain severely disabled veterans and servicemembers.

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Question: I served in the U.S. Air Force in Iraq from 2006 to 2008 and was medically retired due to a spinal-cord injury that resulted in the loss of use of my lower and upper extremities. I subsequently filed a claim for VA benefits and was awarded service connection at the R-2 level in November 2008. I am in the process of having a home built. Does VA offer a mortgage life insurance program? If so, what are the requirements and cost?

Answer: VA does offer Veterans Mortgage Life Insurance (VMLI). This program provides coverage on the home mortgage of certain severely disabled veterans and servicemembers. It is designed to pay off the mortgages of veterans with disabilities in the event of their death.

If you are eligible, VMLI provides up to $90,000 mortgage life insurance payable to the mortgage holder (i.e., a bank or mortgage lender), in the event of your death. The amount of coverage will equal the amount of the mortgage still owed, but the maximum can never exceed $90,000. VMLI is term insurance that decreases as the mortgage amount is reduced; it has no loan or cash value and pays no dividends.

The insurance is restricted to veterans who receive grants for the purchase, building, or remodeling of Specially Adapted Housing under the authority of title 38, U.S. Code, chapter 21. Grants are available for veterans entitled to compensation for service-connected, permanent, and total disability for one or more of the following conditions:

  • Loss or loss of use of both legs
  • Blindness in eyes plus loss or loss of use of one leg
  • Loss or loss of use of one leg with residuals of organic disease or injury that affects balance or propulsion
  • Loss or loss of use of one leg together with the loss or loss of use of one upper extremity, which affects balance or propulsion

In addition, you must apply for this coverage before your 70th birthday. VMLI will be canceled for any of the following conditions:

  • When the mortgage is paid in full
  • At the termination of your ownership of the property securing the loan
  • At your request
  • If you fail to submit required information
  • If you stop paying the premiums

Effective July 30, 2008, P.L. 110-289 extended VMLI to disabled active-duty servicemembers as well as servicemembers and veterans who have severe burn injuries.

This insurance is payable only to a mortgage company. Therefore, a beneficiary or family member cannot receive the payment because of a claim being filed.

VMLI is available on the following mortgages:

  1. Refinanced
  2. Existing
  3. New
  4. Second

Cost

VMLI premiums are determined by the age of the insured veteran, the mortgage’s balance at the time of the adaptation, and the mortgage’s remaining length.

You must use the housing unit, which is security for the mortgage loan, as your residence. If the title to the property is shared with anyone other than your spouse and is not a joint tenancy ownership or tenancy by the entirety, coverage is only for the percentage of the title in your name.

Once VMLI is approved, premiums must be paid by deduction from the veteran’s monthly compensation or pension payments, if he or she is receiving such payments. If such payments are not being received, the veteran may make direct payments—monthly, quarterly, semiannually, or annually—to the VA Insurance Center in Philadelphia.

In most cases, mortgages can be transferred from one lending company to another; therefore, you must promptly report to VA all changes of status. It is important for VA to know if you have moved, liquidated or refinanced your mortgage, sold your property, or if the mortgage has been sold or traded to another lender.

Insurance protection on a new mortgage will not be effective until VA receives this information. These changes will not affect your coverage. The Department of Veterans Affairs Insurance Center in Philadelphia maintains all VA records involved in the VMLI program, and all such changes must be sent to that office.

This is not a one-time benefit. If an insured veteran sells the home covered under VMLI and later purchases another home, he or she is entitled to have the newly purchased home covered for the full amount of VMLI available.

How to Apply

Complete VA Form 29-8636 and submit it to the Department of Veterans Affairs Regional Office and Insurance Center in Philadelphia.

To learn more about Veterans Mortgage Life Insurance, contact your local PVA office or VA Regional Office.

Contact: PVA Veterans Benefits Department, 800-424-8200, or AnthonyS@pva.org

 

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