Using Power of Attorney for FHA and VA Loans

Buying or refinancing a home can sometimes be complicated--purchasing a home in the name of someone who physically isn’t able to be present for the transaction requires the use of special legal arrangements to make the sale. 

A military member deployed overseas or someone who is in the hospital or extended care facility may need to use legal paperwork giving a trusted third party the power to make legally binding agreements in the borrower’s name.

This legal paperwork is called a power of attorney and can be used to get things done on an FHA or VA home loan/refi. 

VA and FHA loans and refi loans have different standards in some cases as to the power of attorney. In some cases the borrower may need to work closely with the lender to insure all requirements are met including one for FHA loans that dictate at what stage in the lending process the actual borrower’s signature may be needed to move the process to closing time. According to HUD 4155.1, Chapter One Section Three:

“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.”

For incapacitated borrowers, “A power of attorney may be used for incapacitated borrowers who

are unable to sign the mortgage application. 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.”

Those are the FHA loan rules. What does the VA loan rulebook say about using a power of attorney in these cases and others? According to VA Pamphlet 26-7, “VA will allow a veteran to use an attorney-in-fact to execute any documents necessary to obtain a VA-guaranteed loan. This enables active duty servicepersons stationed overseas, and other veterans who cannot be present to execute loan documents, to obtain VA loans.”

Talk to your loan officer to determine what specific steps might be needed to complete your loan process using a power of attorney.

 

 

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