May 14, 2014
If you are considering the use of a Power of Attorney in conjunction with an FHA mortgage loan, there’s a very important rule you should know. Using a Power of Attorney isn’t common for many borrowers, but for those who do need it, understanding the rules and responsibilities of this procedure can make the entire process go more smoothly.
FHA loan rules state clearly, “The initial mortgage loan application may not be executed by using a power of attorney, except in circumstances as indicated in the table below. Note: Either the initial application or the final, if one is used, must contain the signatures of all borrowers.”
The table referenced in that quote from HUD 4155.1 includes circumstances for military members. “A power of attorney may be used for military personnel on overseas duty or on an unaccompanied tour. The lender should obtain the absent borrower’s signature on the application by mail or via fax.”
Another situation covered by FHA loan Power of Attorney rules is for applications by incapacitated borrowers. “A power of attorney may be used for incapacitated borrowers who are unable to sign the mortgage application.”
Furthermore, “The lender must provide evidence that the signer has authority to encumber the property and to obligate the borrower. Acceptable evidence includes a durable power of attorney specifically designed to survive incapacity and avoid the need for court proceedings. The incapacitated individual must occupy the property to be insured, except if it is an eligible investment property.”
The most important rule to keep in mind is the one mentioned first, which states that either the initial or the final loan application must contain the signature of all borrowers. That can mean some advance planning is required, especially where military members facing a deployment or reassignment are involved.
Do you have questions about FHA home loans? Ask us in the comments section. You can get information about applying or getting pre-approved for an FHA loan at FHA.com, a private company and not a government website.
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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