The guidance in Lender Letter LL-2020-03, Impact of COVID-19 on Originations introduces a new requirement for purchase transactions closing subject to a power of attorney, requiring borrower confirmation of the loan terms with the borrower. When does this requirement apply?
Except for situations described in the next sentence, the requirement for borrower acknowledgement (in person or via telephone conversation or a video conference system) of his or her understanding of the loan terms applies to all purchase transactions, regardless of who is serving as attorney-in-fact. However, for purchase (as well as limited cash-out refinance transactions) where the attorney-in-fact is a person “connected to the transaction” listed in B8-5-05, Requirements for the Use of a Power of Attorney, then the existing processes in B8-5-05 are mandatory, and there is no need for any further borrower acknowledgment.
The new borrower acknowledgment requirements only apply to borrowers signing by a power of attorney. If a borrower signs personally, and another borrower signs via a power of attorney, then no acknowledgement by any borrower signing personally is required by Lender Letter LL-2020-03, Impact of COVID-19 on Originations.