FHA Issues New Q&A for Single Family Housing

April 16, 2020

In response to the health crisis, the Federal Housing Administration (FHA) released an updated FHA Single Family Housing COVID-19 Q&A. The revised document addresses the acceptance of title policies with gap insurance, and the use of remote online notarization and powers of attorney.

  • On Title insurance: There are several large counties where recording offices are shut during the COVID-19 Emergency. Will FHA accept title policies with gap insurance? FHA does not mandate title insurance. However, 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. FHA does not object to mortgagees obtaining gap insurance to protect against the potential of not obtaining first lien position.
  • Does FHA accept loans closed using a remote online notary during the COVID-19 Emergency? If so, which states are allowed under your policy? FHA does not regulate the use or format of the notarization of documents. The mortgagee 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. Generally, the state law governs what requirements are applicable for proper notarization of a document.
  • Does FHA permit the use of a Power of Attorney (POA) to execute closing documents during the COVID-19 Emergency? 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. Detailed requirements on the use of a POA to execute closing documents can be found in the SF Handbook, Section II.A.6.a(xiii). Included in this section are specific requirements for use of a POA, which has a connection to the transaction.

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