February 16, 2016
FHA loan rules in HUD 4000.1 spell out a variety of procedures and requirements for the handling of new purchase mortgage loans and refinance loans. One portion of this new (published in late 2015) FHA single family home loan rulebook governs the requirement for borrower signatures on key documents in the FHA loan process.
Borrowers must not be asked to sign blank pages or incomplete documents–that’s one of the most basic requirements of the FHA loan procedure. But what are the other rules? Can a borrower use a power-of-attorney for portions of the loan process? What other documents require the borrower’s signature?
A section of HUD 4000.1 titled, “Signature Requirements For All Application Forms” states:
“All Borrowers must sign and date the initial and final Fannie Mae Form 1003/Freddie Mac Form 65, Uniform Residential Loan Application (URLA). All Borrowers must sign and date page two of the initial form HUD-92900-A, HUD/VA Addendum to Uniform Residential Loan Application, and sign and date the complete final form HUD-92900-A. The application may not be signed by any party who will not be on the Note.”
FHA loan rules for power of attorney are clear. “A Power of Attorney (POA) may not be used unless the Mortgagee verifies and documents that all of the following requirements have been satisfied:”
“For military personnel, a POA may only be used for one of the applications (initial or final), but not both: when the service member is on overseas duty or on an unaccompanied tour; when the Mortgagee is unable to obtain the absent Borrower’s signature on the application by mail or via fax; and where the attorney-in-fact has specific authority to encumber the Property and to obligate the Borrower.”
HUD 4000.1 says that “acceptable evidence” may include what’s known as a “durable POA” created in such a way as to “survive incapacity and avoid the need for court proceedings”.
And what about signatures required of incapacitated borrowers? HUD 4000.1 states:
“For incapacitated Borrowers, a POA may only be used where: a Borrower is incapacitated and unable to sign the mortgage application; the incapacitated individual will occupy the Property to be insured, or the Property is being underwritten as an eligible Investment Property; and the attorney-in-fact has specific authority to encumber the Property and to obligate the Borrower.”
Again, FHA loan rules state that in these cases acceptable evidence includes, “a durable POA specifically designed to survive incapacity and avoid the need for court proceedings”.
HUD 4000.1 also permits the use of electronic signatures–we will cover the rules for those in another blog post.
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http://www.fha.com/fha_loan_limits_widget
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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