Can a closing agent or other affiliated party sign loan documents on the borrower’s behalf using a power of attorney (POA)?
Yes. We have expanded the transaction types that are eligible for a party with a connection to the transaction to serve as attorney-in-fact, including an employee of the title insurance company providing the title insurance policy. In addition to limited cash-out refinances (which are currently permitted in the Selling Guide), this exception now also applies to purchase transactions.
All related requirements in B8-5-05, Requirements for Use of a Power of Attorney must be met including the on-line, interactive internet session, the express statements required in the POA, and the prohibition against the attorney-in-fact being an employee of the lender.
- For purchase and limited cash-out refinance transactions, when the attorney-in-fact 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.
- 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 they are also a relative of the borrower.
The POA Job Aid contains detailed information on additional flexibilities and new requirements outlined in Lender Letter LL- 2020-03, Impact of COVID-19 on Originations for loans with documents signed subject to a power of attorney.