Agency Power of Attorney Requirements

April 20, 2020rashtonBulletin

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 been updated with FHA guidance. The changes are shown in red font.

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 loans with application dates on or before May 17, 2020.

Selling Guide, B8-5-05, Requirements for Use of a Power of Attorney, contains FNMA requirements for powers of attorney. For loans with application dates on or before May 17, 2020, 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.

  • If a power of attorney is required to be notarized, it may be remotely notarized in accordance with A2-5.1-03, Electronic Records, Signatures, and Transactions (as revised by Lender Letter (LL-2020-03)) with the additional flexibility that it may be remotely notarized in all jurisdictions, even if not expressly permitted by the Guide, as long as the power of attorney is not required to be recorded. If the power of attorney is required to be recorded, it may be remotely notarized only in the jurisdictions permitted by A2-5.1-03 (as revised by the table below).
  • The limitations in B8-5-05 requiring at least one borrower signature of the note and security instrument are suspended.
  • Under the Guide to Delivering eMortgages to Fannie Mae, powers of attorney are not permitted to be used in connection with loans with electronic notes (“eNotes”). Fannie Mae is revising the eMortgage Guide effective Apr. 20, 2020 to permit eNotes to be delivered in transactions in which a printed or electronic power of attorney is used on the same conditions as those applying to paper notes, except that the power of attorney must accompany the eNote through MERS® eDelivery. In anticipation of the change in the eMortgage Guide, lenders that are authorized to deliver eNotes may begin permitting the use of powers of attorney consistent with B8-5-05 and Lender Letter (LL-2020-03) immediately, provided that the eNote and related power of attorney may not be delivered to Fannie Mae through MERS eDelivery or submitted to Loan Delivery until after Apr. 20, 2020.

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 Application Received Dates on or before May 17, 2020

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 or eMortgage, 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. If a POA must be notarized, it may be remotely notarized in all jurisdictions, even if not expressly permitted by this Bulletin, as long as the power of attorney is not required to be recorded. 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 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:

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