January 30, 2018
Who can legally sign my FHA home loan documents? That may seem like an obvious question to some, but there are circumstances where the borrower themselves may be unable to sign the paperwork to complete the loan transaction.
What options do borrowers have in these situations when applying for an FHA mortgage, refinance loan, or reverse mortgage?
FHA Loan Rules For Signatures: The Basics
The rules covering a borrower’s legally binding signature on loan documents used to process FHA home loans can be found in HUD 4000.1, which begins by stating:
“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.”
In general, there are situations where the loan documents may be signed by someone other than the actual borrower; loans where an “entity” such as a nonprofit is the signer, FHA loans where the borrower is incapacitated and needs a Power of Attorney, and loans where a Power of Attorney is used such as for a military member who has been deployed overseas.
FHA loan rules For Signing Loan Documents: Entities
FHA loan rules are fairly simple for situations where the borrower is an entity rather than an individual buyer. From HUD 4000.1:
“For Borrowers that are Entities, the signatory must be a representative who is duly authorized to bind the Entity.”
Lender standards and state law may play a part in how the representative must identify themselves as duly authorized persons able to sign on the entity’s behalf. Your lender will be able to give clarification on what that financial institution’s standards are in such cases.
FHA Loan Rules For Signing Loan Documents With Powers Of Attorney
According to HUD 4000.1, a borrower cannot have loan documents signed by another using a Power of Attorney (POA) unless the following requirements are 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. Acceptable evidence includes a durable POA specifically designed to survive incapacity and avoid the need for court proceedings.
-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. Acceptable evidence includes a durable POA specifically designed to survive incapacity and avoid the need for court proceedings.
FHA loan rules prohibit borrowers or their authorized representatives from signing blank pages, impartial documents, or documents that have blank spaces.
Bruce Reichstein has spent over three decades as an experienced FHA and VA home loan mortgage banker and underwriter where he was responsible for funding “Billions” in government backed mortgage loans. He is the Managing Editor for FHANewsblog.com where he educates homeowners on the specific guidelines for obtaining FHA guaranteed home loans.
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