Selling Guide

Published June 3, 2020

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B8-5-05, Requirements for Use of a Power of Attorney (06/05/2019)

Introduction

This topic contains information on requirements for use of a power of attorney, including:

 

Overview

Except as provided below, an attorney-in-fact or agent under a power of attorney may sign the security instrument and/or note, as long as the lender obtains a copy of the applicable power of attorney. In jurisdictions where a power of attorney used for a signature on a security instrument must be recorded with the security instrument, the lender must ensure that recordation has been effected. The name(s) on the power of attorney must match the name(s) of the person on the affected loan document, and the power of attorney must be dated such that it was valid at the time the affected loan document was executed. The power of attorney must be notarized and, unless otherwise required by applicable law, must reference the address of the subject property. If applicable law requires an original power of attorney for enforcement or foreclosure purposes, an original (rather than a copy) must be forwarded to the document custodian.

 

Allowable Attorneys-in-Fact or Agents Under a Power of Attorney

Except as otherwise required by applicable law, or unless they are the borrower’s relative, none of the following persons connected to the transaction shall sign the security instrument or note as the attorney-in-fact or agent under a power of attorney:

  • the lender;

  • any affiliate of the lender;

  • any employee of the lender or any other affiliate of the lender;

  • the loan originator;

  • the employer of the loan originator;

  • any employee of the employer of the loan originator;

  • the title insurance company providing the title insurance policy or any affiliate of such title insurance company (including, but not limited to, the title agency closing the loan), or any employee of either such title insurance company or any such affiliate; or

  • any real estate agent with a financial interest in the transaction or any person affiliated with such real estate agent.

As used herein, the borrower’s relative includes any person defined as a relative in this Guide, or a person who is a fiancé, fiancée, or domestic partner of the borrower.

For refinance transactions, an individual who would otherwise be prohibited from serving as an attorney-in-fact or agent under the restrictions above may execute the required loan documents on behalf of the borrower(s), provided all of the following conditions are met:

  • The attorney-in-fact or agent is not an employee of the lender.

  • The power of attorney expressly states an intention to secure a loan not to exceed a stated amount from a named lender on a specific property.

  • The power of attorney expressly authorizes the attorney-in-fact or agent to execute the required loan documents on behalf of a borrower only if the borrower has, to the satisfaction of the attorney-in fact or agent in a recorded, interactive session conducted via the Internet, both

    • confirmed his or her identity; and

    • reaffirmed, after an opportunity to review the required loan documents, his or her agreement to the terms and conditions of the required loan documents evidencing such transaction and to the execution of such required loan by such attorney-in-fact or agent.

  • The lender must produce at Fannie Mae’s request at any time during the term of the related loan, within a commercially reasonable time following such request and without additional expense to Fannie Mae, a recording and other documentary media memorializing the entirety of the interactive session.

 

Restrictions on the Use of a Power of Attorney

Except as required by applicable law, a power of attorney may not be utilized to sign a security instrument or note if either (or both) of the following applies:

  • No other borrower executes such loan document in person in the presence of a notary public. Exceptions: A power of attorney may be utilized to sign such loan document for each borrower:

    • as permitted in connection with a refinance transaction conducted in a recorded, interactive session on the Internet as described above in Allowable Attorneys-in-Fact or Agents Under a Power of Attorney;

    • as long as the attorney-in-fact or agent under the power of attorney is either the borrower’s attorney-at-law or the borrower’s relative; or

    • as long as the attorney-in-fact or agent under the power of attorney signs the security instrument in their own capacity as an owner of the mortgaged property.

  • The transaction is a cash-out refinance.

 

Additional Requirements

If a power of attorney is used because the lender determines such use is required by applicable law, the lender must include in the mortgage loan file a written statement that explains the circumstances. Such statement must be provided to the document custodian with the power of attorney.

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