Can I use a Power of Attorney when originating an FHA insured loan?

A Power of Attorney (POA) may be used only if the lender verifies and documents that all of the following requirements have been satisfied: 

For military personnel, a POA may only be used for one of the applications (initial or final), but not both: 
- when the service member is on overseas duty or on an unaccompanied tour;  
- when the lender is unable to obtain the absent borrower’s signature on the application by mail or via fax; and  
- where the attorney-in-fact has specific authority to encumber the property and to obligate the borrower.
Acceptable evidence includes a durable POA specifically designed to survive incapacity and avoid the need for court proceedings. 
 
For incapacitated borrowers, a POA may only be used where: 
- a borrower is incapacitated and unable to sign the mortgage application; 
- the incapacitated individual will occupy the property to be insured, or the property is being underwritten as an eligible investment property; and 
- the attorney-in-fact has specific authority to encumber the property and to obligate the borrower.
 Acceptable evidence includes a durable POA specifically designed to survive incapacity and avoid the need for court proceedings. 
 
For guidance on a borrower designating an attorney-in-fact to use a POA to sign documents on their behalf at closing, see Handbook 4000.1 II.A.6.a.xiii.(A). 
 
For additional information see Handbook 4000.1 II.A.1.a.i.(A)(3) available at https://www.hud.gov/program_offices/administration/hudclips/handbooks/hsgh
 

All policy information contained in this knowledge base article is based upon the referenced HUD policy document. Any lending or insuring decisions should adhere to the specific information contained in that underlying policy document.


Topic Number: KA-04791