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.
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:
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 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):
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:
|Previous Guide requirement (prior to this Bulletin)||Temporary flexibilities related to Powers of Attorney|
|POA may be used to execute Initial Loan Documents and Closing Documents||If the Borrower is unable to sign documents personally or by electronic signature (including by using the mail or delivery service) a POA may be used to execute any of the Initial Loan Documents and Closing Documents related to the origination of the Mortgage, including the initial Form 65, except that the Borrower must personally sign the initial Form 65 (including by means of an Electronic Signature) if at all possible. If an ink or electronic signature is not possible, then signature by an attorney-in-fact is permissible.|
|Only a person who has a familial, personal or fiduciary relationship with the Borrower may be the attorney-in-fact for the Borrower in a POA||In addition to those persons permitted by Section 6301.4 to be the attorney-in-fact, the following are also allowed:
· An individual employed by the title insurer underwriting the title insurance policy for the Mortgage; or
· An individual employed by the title agency issuing the title insurance policy for the Mortgage and closing the transaction but only if the title insurer has issued a closing protection letter relating to the transaction (or similar contractual indemnity) for such policy issuing agent
Neither the property seller of the property in a purchase transaction nor an employee of the originating lender is eligible to become an attorney-in-fact under a POA unless he or she otherwise meets an eligibility requirement herein.
|No cash-out refinance Mortgages||Purchase transaction Mortgages|
|POA must be notarized||POA does not have to be notarized unless required by applicable law, e.g., to record it with the Security Instrument.||POA must be notarized.|
|Discussion with Borrower not needed||Discussion with Borrower not needed.||For Mortgages with Note Dates on and after April 7, 2020:
After the Closing Disclosure has been delivered to the Borrower but prior to closing, an employee of the originating lender or settlement agent must explain and discuss the terms of the loan and use of the POA with the Borrower to confirm that the 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 Borrower 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.
|However, whenever the attorney-in-fact under the POA is an individual employed by the title insurer or the title agent, then the discussion described above is always required, regardless of loan type.|
Please Note: These temporary requirements do not apply to cash-out refinance Mortgages and Texas Equity Section 50(a)(6) Mortgages.
FHA permits a borrower to designate an attorney-in-fact to use a POA to sign documents on their behalf at closing, including:
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.
No guidance issued as of 3/31/20
No guidance issued as of 3/31/20
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Government Agency Approval | FHA Non-Supervised Mortgage Approval #: 24751-0000-5 | VA Automatic Lender Approval #: 902324-00-00