Agency Power of Attorney Requirements

Overview

Carrington Mortgage Services, LLC (CMS) is actively monitoring the spread of COVID-19 (coronavirus) throughout the United States and its potential impact to our borrowers and loan originations. Our ability to continue to serve our customers is a top priority and this bulletin will be updated as additional Agency guidance related to powers of attorney is received. This bulletin has updated effective dates. The changes are shown in red.

FNMA Temporary Flexibilities for Powers of Attorney

Effective: Unless otherwise noted in this section below, these flexibilities are effective immediately for all loans in process and remain in place for all loan applications until further notice.
Selling Guide, B8-5-05, Requirements for Use of a Power of Attorney, contains FNMA requirements for powers of attorney. For all loan applications until further notice, the following additional requirements for using a power of attorney apply:

• All powers of attorney must include the address of the mortgaged property.
• The existing FNMA Selling Guide conditions allowing persons “connected to the transaction” to serve as an attorney-in-fact or agent in refinance transactions will also now apply to purchase transactions as well as limited cash-out refinances. This includes all the related current requirements applicable to limited cash-out refinance transactions involving these persons in the FNMA Selling Guide (that is, excluding lender employees, limiting by loan amount and property location, requiring a recorded Internet session after the borrower has received proposed loan documents, and mandating retention of the recording).
• Unless a recorded Internet session described in the paragraph above is required, a power of attorney may only be used in a purchase transaction with a note date on or after Apr. 7, 2020, if, after the Closing Disclosure or other closing statement, as applicable, has been delivered to the borrower before closing, an employee of the lender or settlement agent explains the terms of the loan to the borrower(s) to confirm that each borrower understands them. This discussion must take place in person, telephonically, or using a video conference system, and must be memorialized by an acknowledgment by the borrowers of his or her understanding of the terms of the loan. The acknowledgment may be in writing or in a recording of the telephonic or video discussion.
• Notwithstanding anything to the contrary in the Selling Guide or Lender Letter (LL-2020-03), for purchase transactions the attorney-in-fact or agent may not be the property seller, any relative of the property seller, or any direct or indirect employee or agent of the property seller, unless in any such instance such person is also a relative of the borrower.
• Whenever an attorney-in-fact or agent is an employee of the insuring title insurer or is an employee of the policy-issuing agent of the insuring title insurer, such title insurer must have issued a closing protection letter (or similar contractual protection) for the transaction for such policy issuing agent.
• Whenever a power of attorney is used at closing, whether authorized under the Selling Guide or under the standards in Lender Letter (LL-2020-03), the provisions of B1-1-01,Application Package Documentation requiring the borrower’s personal signature of the initial Form 1003 continue to apply if the initial Form 1003 can be signed personally (including through the United States Postal Service or commercial delivery service). , or signed electronically as permitted by the Selling Guide. If the initial Form 1003 cannot be timely signed by the borrower in these ways, then it must be signed by the holder of such power of attorney.
• Provided the power of attorney is not required to be notarized under applicable law (for example, the law governing the creation of the power of attorney, or the law of the location of the mortgaged property), the power of attorney is not required to be notarized if the transaction is a limited cash-out refinance unless

o   the attorney-in-fact or agent named in the power of attorney is employed by, or otherwise represents or is affiliated with, the title insurance company that will issue the lender’s title insurance policy, and
o   such title insurance company is affiliated with the lender.

• The limitations in B8-5-05 requiring at least one borrower signature of the note and security instrument are suspended.

The following existing policies remain in effect for loans using powers of attorney authorized by the Selling Guide as revised by Lender Letter (LL-2020-03):

• Lenders may not deliver loans to FNMA that have unacceptable title impediments. Accordingly, the lender must confirm that the title insurance policy does not take exception to the power of attorney, its manner of creation, the effectiveness of its notarization (if any) or to its use in relation to the transaction in accordance with B7-2-05, Title Exceptions and Impediments.
• Lenders must comply with all federal, state and local laws in accordance with A3-2-01,Compliance with Laws. In addition, for Texas Section 50(a)(6) loans, lenders may only use a power of attorney to execute the note or security instrument if the power of attorney is signed at a location at which a Texas Section 50(a)(6) loan may be closed and in conformity with applicable requirements.
• The current and revised provisions of B8-5-05 are always subject to the lender’s determination that applicable law requires the acceptance of a power of attorney in particular circumstances. This remains in place, as does the requirement that the lender document its determination in the loan file

FHLMC Temporary Flexibilities for Powers of Attorney

Effective immediately for Applications Received Until Further Notice
Section 6301.4 currently permits use of a power of attorney (POA) to execute the Initial Loan Documents and Closing Documents on the Borrower's behalf when there is a hardship or emergency. With this Bulletin Freddie Mac confirms that the COVID-19 pandemic constitutes an emergency for purposes of Section 6301.4.
Lenders may allow use of a POA to close a Mortgage, except for cash-out refinance Mortgages and Texas Equity Section 50(a)(6) Mortgages, in accordance with the temporary flexibilities listed in the following chart:

Please Note: These temporary requirements do not apply to cash-out refinance Mortgages and Texas Equity Section 50(a)(6) Mortgages.
 

FHA Powers of Attorney - Updated 4/20/20

FHA permits a borrower to designate an attorney-in-fact to use a POA to sign documents on their behalf at closing, including:

• page 4 of the final Form HUD-92900-A,
• HUD/VA Addendum to Uniform Residential Loan Application (URLA), and
• final Fannie Mae Form 1003/Freddie Mac Form 65, URLA.

Detailed requirements on the use of a POA to execute closing documents can be found in theSF Handbook, Section II.A.6.a(xiii). Included in this section are specific requirements for use of a POA, which has a connection to the transaction.

VA Powers of Attorney

No guidance issued as of 3/31/20

USDA Powers of Attorney

No guidance issued as of 3/31/20