FHA Home Loan Procedures During COVID-19
The Department of Housing and Urban Development issued initial policies in March 2020, but updated them in Mid-April to include provisions in several areas designed to help facilitate FHA home loans during the outbreak.
Home Loans Closed Remotely: HUD Rules
HUD’s updated policies for closing loans during COVID-19 includes a reminder to lenders and borrowers that HUD does not set or enforce guidelines for the use of notarized paperwork to close the loan. This is true with one exception; FHA and HUD rules acknowledge that state law will govern notary procedures.
It is stated FHA and HUD policy that in all cases, the participating FHA lender “must ensure that the mortgage and Note comply with all applicable state and local requirements for creating a recordable and enforceable mortgage, and an enforceable Note, including the requirements for notarization of these documents.”
HUD Policy on Using A Power of Attorney to Close During COVID-19
HUD has updated its guidance for closing loans with a power-of-attorney. FHA loan rules say the use of an attorney-in-fact to close your loan is possible.
“FHA permits a borrower to designate an attorney-in-fact to use a POA to sign documents on their behalf at closing, including page 4 of the final Form HUD-92900-A, HUD/VA Addendum to Uniform Residential Loan Application (URLA), and the final Fannie Mae Form 1003/Freddie Mac Form 65, URLA.”
But what IS an attorney-in-fact? Investopedia has a definition that includes the following:
“An attorney-in-fact is a person who is authorized to perform business-related transactions on behalf of someone else such as the principal of a company. In order to become someone's attorney-in-fact, the principal must sign a power of attorney document.”
HUD Rules on Title insurance
HUD’s guidance on loan servicing addresses a variety of situations including cases where recording offices are not operational during the national emergency. Will FHA accept title policies with gap insurance?
The HUD official site reminds readers that FHA loan rules do not require title insurance, but that said, “...the mortgagee must ensure that all objections to title have been cleared and any discrepancies have been resolved, to ensure that the FHA-insured mortgage is in first lien position” according to the updated COVID-19 instructions to FHA lenders.
“FHA does not object to mortgagees obtaining gap insurance to protect against the potential of not obtaining first lien position.”
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