Portfolio Adjustable Rate Second Trust Deed
- Cash Out
- 30 Year Amortization
- Adjustment Caps: (fixed for 5 years)
- Annual Maximum: 3%
- Lifetime Maximum: 6%
- Lifetime Floor: Start Rate
- Minimum Loan amount $50,000
- Max Loan amount $250,000
- Owner Occupied
- Prime + varies by CLTV
- Index: Prime
- Note/Start Rate Fixed for 5 years = index + margin (See *QUALIFYING RATE)
- First change date will be index + margin and will Adjust every 12 months thereafter, Max Cap of 3% annually.
- Buy up margin from Rate Sheet will increase your Start Rate
- Maximum Cap (Start Rate+6%) for the life of the loan
- Margin 1.25%
- Payment: 30 year amortization calculated at index plus margin.
- No Negative Amortization.
- Admin fee $495
- No Prepayment Penalty
|75% CLTV- MAX $250,000 CASH-OUT
||MAX 75% CLTV - $250,000
- Full Income and Asset Verification is required based on Fannie Mae and/or PB Portfolio Conforming & Jumbo 1st TD Guidelines
- ALL loans must be run through Fannie Mae Desktop Underwriter (DU) for the benefit of alerts. DU documentation relief does not apply to Provident Bank Underwriting Guidelines.
- All loans require a manual underwrite. Credit documentation is based on QM Ability to Repay and the Underwriter’s discretion based on the risk factors of the loan file.
- Unless otherwise addressed in these guidelines, Fannie Mae underwriting guidelines should be followed.
- In some cases, exceptions to underwriting guidelines or product eligibility may be acceptable when strong compensating factors exist to directly address the issue and offset the risk.
- Applying the Re-underwriting Criteria
- The following steps are required if the borrower discloses or Provident Bank discovers additional debt(s) or reduced income after the underwriting decision was made up to and concurrent with loan closing:
||Provident Bank must document the additional debt(s) and reduced income and apply those changes to the loan to confirm loan eligibility.
||If there is a new subordinate debt on the subject property, the mortgage loan must be re-underwritten
||The final loan application signed by the borrower must include all income and debts verified, disclosed, or identified during the mortgage process
- Index (Prime) + Margin = Start Rate
- Start Rate + 3%= Qualifying Rate
- ELIGIBLE BORROWERS
The following are eligible borrowers:
- US Citizens
- Inter-Vivos Revocable Trusts
- The inter vivos revocable trust must be established by one or more natural persons, solely or jointly.
- The primary beneficiary of the trust must be the individual(s) establishing the trust.
- The mortgage must be underwritten as if the individual establishing the trust (or at least one of the individuals, if there are two or more) were the borrower (or a co-borrower, if there are additional individuals whose income or assets will be used to qualify for the mortgage).
- Eligibility Requirements
- At least one individual establishing the trust must be a borrower on the loan.
- Occupancy must be as a primary residence
- The title insurance policy must ensure full title protection and must indicate that title to the subject property is vested in the name of the trustee(s). The policy may not list any exceptions arising from the trust ownership of the property.
- Full title to the property must be vested either:
- Solely in the trustees, or
- Jointly in the trustees and in the name of an individual borrower.
- Permanent Resident Aliens/Non-Permanent Resident Aliens are eligible if they meet the following requirements:
- Can provide acceptable documentation to verify that a non-U.S. citizen borrower is legally present in this U.S.
- Must be employed in the United States for the past 24 months.
- Demonstrate that income and employment for at least 12 months and is likely to continue for at least three (3) years.
- First time homebuyers: A first-time buyer is defined as anyone who has not owned a home for three (3) years. For loans with more than one (1) borrower where at least one borrower has owned a home in the past three (3) years, first-time homebuyer requirements do not apply. (see loan amount limits and reserve requirements)
- All borrowers must have a social security number
- INELIGIBLE BORROWER
- Irrevocable trusts
- Land trusts
- Limited Partnerships, General Partners, Corporations, and Limited Liability Companies
- LLC’s may be considered by exception only:
- Require personal guarantees by all parties owning ≥25%.
- Max LTV 50%
- Personal guarantors sign the note only.
- Verify names of LLC’s principals listed on the Articles of Organization through the California Secretary of State’s website and place copy of the print out in file: https://bizfileonline.sos.ca.gov/
||FULL APPRAISAL REQUIRED
- For properties purchased by seller of the property within 90 days of the fully executed purchase contract, additional requirements apply.
- Second appraisal required
- Property seller on the purchase contract is the owner of record
- Increases in value should be documented with commentary from the appraiser recent paired sales.
- In addition to the following, refer to Fannie Mae guidelines for appraisal requirements: Appraisals should not include comparables greater than six (6) months old at the time of underwriting review.
Properties with values significantly in excess of the predominant value of the subject property’s market area may be ineligible. Fannie Mae/Freddie Mac Forms 1004/70, 1025/72, 1073/465 or 2090 must be used.
Appraisals must be dated within 120 days of the Note date. After a 120 day period, a new appraisal is required (re-certification of value is not acceptable). Escrow holdbacks are not allowed unless the holdback has been dispersed and a certification of completion has been issued prior to close by Provident Bank. Appraisal(s) require evidence subject property is equipped with working carbon monoxide detectors.
When two appraisals are required, the following apply: Appraisals must be completed by two independent companies.
- The LTV will be determined by the lower of the two appraised values as long as the lower appraisal supports the value conclusion. The final inspection and/or recertification of value must be for the appraisal with the lower value. The underwriter must review both appraisal reports and address any inconsistencies between the two reports and all discrepancies must be reconciled.
|Appraisal Value Calculations
||For properties owned less than 12 months the following will apply:
- The lower of the Purchase Price or Appraisal value will be used to calculate the maximum loan amount.
- A copy of the Final Closing Disclosure or Final HUD-1 will be used to determine the Purchase Price and must be verified be the appraiser.
- Note: Improvements made by the borrower since the initial purchase can be added to the Purchase Price when verification can be provided.
- Obtain invoices and
- Proof paid by the borrower
- (cancelled checks) or Bank Statements
- 2 months PITIA for the subject property and
- 4 months PITIA for all financed properties, other than the subject property, requires additional four (4) months reserves for each property.
|IPC Limits (Interested Party Contributions)
- Concurrent Transactions
- Must comply to restrictions of 1st TD
- Owner Occupied
- 75.01% – 80% LTV and CLTV 6% maximum
- ≤ 75% LTV and CLTV 9% maximum
- Stand Alone 2nd TD
- Concessions and Seller Contributions not applicable
|Credit & FICO Score Requirement
- Regardless of documentation type-Minimum Credit Requirements as follows:
- A minimum of 3 trade lines, with 1 seasoned account for minimum of 24 months and $3,500 high credit. The account must have “As Agreed” payment history. A mortgage can be included as one of the required trades.
- 12 months consecutive mortgage payment or rental history is required. No lates within the last 12 months and rolling lates are unacceptable. Rolling mortgage/rental delinquencies and/or mortgage loan past due are not eligible.
- All judgements and liens appearing as a matter of record on title must paid off and/or discharged.
- All Federal/State tax liens, collections & charge-offs must be paid in full prior to close or at closing.
- Borrowers must meet the minimum credit score requirements
- Following standard Agency Guidelines for Bankruptcy, Foreclosure, and Short Sales
- Disputed accounts and Authorized user accounts must meet Agency requirements.
- Use the middle of three or fico scores or lower of two scores for each qualifying borrower and then select the lowest score of all borrowers.
- A minimum of two credit scores required.
|Debits / Liabilities
- The borrower’s liabilities include: All installment debt that is not secured by a financial asset-including student loans, automobile loans, personal loans, and timeshares-must be considered part of the borrower’s recurring monthly debt obligations if there are more than ten monthly payments remaining. However, installment debt with fewer monthly payments remaining also should be considered as a recurring monthly debt obligation if it significantly affects the borrower’s ability to meet his or her credit obligations.
- Documenting Previous Mortgage History
- The Underwriter must review the borrower’s credit report to determine the status of all mortgage accounts. If a borrower had previous mortgages, the Underwriter does not have to independently verify the mortgage’s payment history provided the credit report includes a reference to the mortgage (or mortgages) and reflects 12 months of the most recent payment activity.
- If adequate mortgage payment history is not included in the borrower’s credit report, the Underwriter must use the following to verify the borrower’s payment history on a previous mortgage(s):
- A standard mortgage verification;
- Loan payment history from the servicer;
- Standard Mortgage Verifications from Servicers. When an Underwriter relies on standard mortgage verifications from servicers or holders, he/she must ensure that the verifications include:
- The unpaid principal balance of the mortgage and monthly payment amount;
- The present status of the mortgage, such as current, 30 days’ delinquent, etc.; and
- The borrower’s payment history.
- When a servicer fails to provide all the requested information, the Underwriter must rely on information provided through the borrower’s canceled checks. The checks must:
- Be legible
- Identify the mortgage servicer or mortgage holder as the payee,
- Indicate the servicer or holder endorsed the check for deposit, and
- Indicate the date the servicer or holder deposited the check.
- The borrower’s canceled checks for the last 12 months; or
- The borrower’s year-end mortgage account statement provided the statement includes a payment receipt history, and if applicable, canceled checks for the months elapsed since the year-end mortgage account statement was issued.
- Debts Paid by Others: Certain debts can be excluded from the borrower’s recurring monthly obligations and the DTI ratio:
- When a borrower is obligated on a non-mortgage debt- but is not the party who is actually repaying the debt-the Underwriter may exclude the monthly payment from the borrower’s recurring monthly obligations. This policy applies whether or not the other party is obligated on the debt, but is not applicable if the other party is an interested party to the subject transaction (such as the seller or realtor). Non-mortgage debts include installments loans, student loans, revolving accounts, lease payments, alimony, child support, and separate maintenance. See below for treatment of payments due under a federal income tax installment agreement.
- When a borrower is obligated on a mortgage debt-but is not the party who is actually repaying the debt-the Underwriter may exclude the full monthly housing expense (PITIA) from the borrower’s recurring monthly obligations if:
- the party making the payments is obligated on the mortgage debt,
- there are no delinquencies in the most recent 12 months, and
- the borrower is not using rental income from the applicable property to qualify.
- In order to exclude non-mortgage or mortgage debts from the borrower’s DTI ratio, the Underwriter must obtain the most recent 12 months’ canceled checks (or bank statements) from the other party making the payments that documented a 12-month payment history with no delinquent payments.
- Deferred Installment Debt
- Deferred installment debts must be included as part of the borrower’s recurring monthly obligations.
- For deferred installment debts other than student loans, if the borrower’s credit report does not indicate the monthly amount that will be payable at the end of the deferment period, the Underwriter must obtain copies of the borrower’s total monthly obligations.
- Student Loans
- If a monthly student loan payment is provided on the credit report, the Underwriter may use the amount for qualifying purposes. If the credit report does not reflect the correct monthly payment, the Underwriter may use the monthly payment that is on the student loans documentation(the most recent student loan statement) to qualify the borrower.
- If the credit report does not provide a monthly payment for the student loan, or if the credit report shows $0 as the monthly payment, the Underwriter must determine the qualifying monthly payment using one of the options below.
- If the borrower is on an income-driven payment plan, the Underwriter may obtain student loan documentation to verify the actual monthly payment is $0. The underwriter may then qualify the borrow with a $0 payment.
- For deferred loans or loans in forbearance, the Underwriter may calculate
- A payment equal to 1% of the outstanding student loan balance (even if this amount is lower than the actually fully amortizing payment), or
- A fully amortizing payment using the documented loan repayment terms.
- Federal Income Tax Installment Agreements
- When a borrower has entered into an installment agreement with the IRS to repay delinquent federal income taxes, the Underwriter may include the monthly payment amount as part of the borrower’s monthly debt obligations(in lieu of requiring payment in full) if:
- There is no indication that the Notice of Federal Tax Liens has been filed against the borrower in the county in which the subject property is located.
- The underwriter obtains the following documentation:
- An approved IRS installment agreement with the terms of repayment, including the monthly payment amount and total amount due; and
- Evidence the borrower is current on the payments associated with the tax installment plan. Acceptable evidence includes the most recent payment reminder from the IRS, reflecting the last payment amount and date and the next payment amount owed and due date. At least one payment must have been made prior to closing.
- The payments on a federal income tax installment agreement can be excluded from the borrower’s DTI ratio if the agreement meets the terms in Debts Paid by Others or Installment Debt.
- If any of the above conditions are not met, the borrower must pay off the outstanding balance due under the installment agreement with the IRS Debts being paid off at or Prior to Closing.
- Alimony, Child Support, or maintenance payments: When the borrower is required to pay alimony, child support, or maintenance payments under a divorce decree, separation agreement, or any other written legal agreement-and those payments must continue to be made for more than ten months-the payments must be considered as part of the borrower’s recurring monthly debt obligations. However, voluntary payments do not need to be taken into consideration and an exception is allowed for alimony.
- For alimony obligations, the Underwriter has the option to reduce the qualifying income by the amount of the alimony obligation in lieu of including it as a monthly payment in the calculation of the DTI ratio. If the Underwriter exercises this option, a copy of the divorce decree, separation agreement, court order or equivalent documentation confirming the amount of the obligation must be obtained and retained in the loan file.
- Lease Payments
- Lease payments must be considered as recurring monthly debt obligations regardless of the number of months remaining on the lease.
- This is because the expiration of a lease agreement for rental housing or an automobile typically leads to either a new lease agreement, the buyout of the existing lease, or the purchase of a new vehicle or house.
- Open 30-Day Charge Accounts
- Open 30-day charge accounts require the balance to be paid in full every month.
- Provident Bank does not require open 30-day charge accounts to be included in the debt-to-income ratio.
- Revolving Charge/Lines of Credit
- Revolving charge accounts and unsecured lines of credit are open-ended and should be treated as long-term debts and must be considered part of the borrower’s recurring monthly debt obligations.
- These trade lines include credit cards, department store charge cards, and personal lines of credit. Equity lines of credit secured by real estate should be included in the housing expense.
- If the credit report does not show a required minimum payment amount and there is no supplemental documentation to support a payment of less than 5%, the underwriter must use 5% of the outstanding balance as the borrower’s recurring monthly debt obligation.
|Multiple Properties Financed/Owned
NOTE: 1-4 unit financed properties held in the name of an LLC or other corporation can be excluded from the calculation of number of properties financed only in cases where the borrower is not personally obligated for the mortgage.
- The borrower(s) may own a total of ten (10) financed, 1-4 unit residential properties, including the subject property and regardless of occupancy.
- All financed properties, other than the subject property, require additional four (4) months reserves for each property.
|Employment and Income
- Stability of Employment and Income
- Stable monthly income is the Borrower’s verified gross monthly income from all acceptable and verifiable sources that can reasonably be expected to continue for at least the next three years.
- For each income source used to qualify the Borrowers, the Underwriter must determine that both the source and the amount of the income are stable.
- A two-year history of receiving income is required in order for the income to be considered stable and used for qualifying. When the Borrower has less than a two-year history of receiving income, the Underwriter must provide a written analysis to justify the determination that the income that is used to qualify the Borrower is stable.
- While the sources of income may vary, the Borrower should have a consistent level of income despite changes in the sources of income.
- The following is required to establish stability of employment and income for the borrower(s) whose income is used to qualify:
- A minimum of two (2) years employment and income history
- Gaps in employment in excess of 30 days during the past two (2) years require a satisfactory letter of explanation and the borrower must be employed with their current employer for a minimum of six (6) months to qualify.
- For Borrowers who has less than a two-year employment and income history the Borrower’s income may be used for qualifying income if the Mortgage file contains documentation to support that the Borrower was either attending school or in a training program immediately prior to their current employment history; School transcripts must be provided to document.
- (Underwriter may call School (Institution) to verify Borrowers Enrollment).
- For borrowers of retirement age using asset distributions for income, see Section 10.C under Fixed Income for further requirements.
- Income may not be used for qualification purposes if it comes from any source that cannot be verified, is not stable, or will not continue.
|Eligible First Mortgages
- Eligible First Mortgages
- Conventional conforming, non-conforming and jumbo loan amounts
- Fixed or Adjustable Rate Mortgages
- VA or FHA loans (Stand-alone transactions only)
- Ineligible First Mortgages:
- Contract for deed, contract for purchase or land contracts. (Including CAL-VET Contracts)
- Private party first liens (unless serviced by an institutional lender or servicing company)
- Loan that provide for future advances
- Negatively Amortizing First Mortgages
- Prohibiting placement of additional liens on property
- Balloon loan without a reset or refinance feature
- Interest Only Mortgages without a recast provision (Balloon)
- Reverse mortgages
- An Escrow or Sub-escrow must be opened on all 2ND TD Transactions
- Exceptions to these written guidelines may be made by Provident Bank on a case by case basis.
- NO Exceptions will be granted for DTI EXCEEDING 43%
- Exceptions to any of the above guidelines must be approved by PSB Corporate Office.
- Exceptions on loans requiring MI must be approved with the Mortgage Insurance Company prior to submitting for a PSB Exception.
- Underwriter to make sure all exception requests are completed in the LOS.
|First Mortgage Payment Calculation for Loan Qualifying
- Arms: Qualify the borrower at the greater of the note rate or the index plus the margin.
- 1st Mortgages Not allowed under this program:
- Temporary Buy-downs
- Interest Only
- Negatively Amortizing
|First Mortgage Restrictions
- A standard flood hazard determination form must be included in each file.
- On Piggyback transactions, separate certifications are not required.
- Primary residence
- Immediate family member only
- If the borrower receives a gift from a relative or domestic partner who has lived with the borrower for the last 12 months, or from a fiancé or fiancée, the gift is considered the borrower’s own funds and may be used to satisfy the minimum borrower contribution requirements as long as both individual will use the home being purchased as their principal residence.
- Verifying Donor Availability of Funds and Transfer of Gift Funds
- The Underwriter must verify the sufficient funds to cover the gift are either in the donor’s account or have been transferred to the borrower’s account.
- Acceptable documentation includes the following:
- A copy of the donor’s check and the borrower’s deposit slip,
- A copy of the donor’s withdrawal slip and the borrower’s deposit slip,
- A copy of the donor’s check to the closing agent, or
- A settlement statement showing receipt of the donor’s check.
- When the funds are not transferred prior to settlement, the Underwriter must document that the donor gave the closing agent the gift funds in the form of a certified check, a cashier’s check, or other official check.
|Soft Market Area Restrictions
- PSB has no Soft Market Area Restrictions.
- All property taxes must be current or paid current at closing.
- Real estate taxes must reflect "not yet due and payable"
- If taxes are delinquent, they must be paid current either from loan proceeds or from the borrowers own funds.
- Proof that all taxes, including any outstanding supplemental taxes, have been paid will be required.
- A full ALTA policy is required regardless of the loan amount.
- Title report date must not be greater than 120 days from the date of funding.
- Short Form policy acceptable on Standalone 2nd unless,
- PSB New Second will be in 1st lien position.
|Properties With Solar Panels
- All Solar Leases and Power Purchase Agreements must be reviewed by the Underwriter
- If the property owner is the owner of the solar panels, standard eligibility requirements apply (for example, appraisal, insurance and title
- If the solar panels are leased from or owned by a third party under a power purchase agreement or other similar arrangement, the following requirements apply:
- The solar panels may not be included in the appraised value of the property.
- The property must maintain access to an alternate source of electric power that meets community standards. For example, properties utilizing leased solar panels must also remain connected to traditional electrical power services to ensure uninterrupted access to electricity in the event the solar panels become nonfunctioning or are removed.
- The monthly lease payment must be included in the debt-to-income (DTI) ratio calculation unless the lease is structured to:
- Provide delivery of a specific amount of energy at a fixed payment during a given period, and
- Have a production guarantee that compensates the borrower on a prorated basis in the event the solar panels fail to meet the energy output required for in the lease for that period.
- Payments under power purchase agreements where the payment is calculated solely based on the energy produced may be excluded from the DTI ratio.
- The lease or power purchase agreement must indicate that:
- Any damage that occurs as a result of the installation, malfunction, manufacturing defect, or the removal of the solar panels is the responsibility of the owner of the equipment and the owner must be obligated to repair the damage and return the improvements to their original or prior condition (for example, sound and watertight conditions that are architecturally consistent with the home).
- The owner of the solar panels agrees not to be named loss payee (or named insured) on the property owner’s property insurance policy. As an alternative the underwriter may verify that the owner of the solar panels is not named a loss payee.
- In the event of foreclosure:
- Provident Bank may terminate the lease/agreement and require the third-party owner to remove the equipment;
- Provident Bank has the right to become the beneficiary of the borrower’s lease/agreement with third party without charge; or
- Provident Bank has the right, but not the obligation, to enter into a new lease/agreement with the third party, under terms no less favorable than the prior owner.
- Note: Any lease/agreement in which Provident Bank is a party in connection with a foreclosure (whether as beneficiary or direct party), must also be assignable to a subsequent purchaser of the realty from Provident Bank. In addition, Provident Bank must also have the right to terminate the lease/agreement and require removal of the equipment (for example, if the third party places restrictions on the assignment to a purchaser.
- Title exceptions with respect to the solar panels (for example, easements, notice of contract) may be present on the title provided the interest is not superior to first lien position
- The title cannot reflect any liens related to the ownership or maintenance of the solar panels that will result in a lien superior to first lien position.
|Inter Vivos Revocable Trust Closing Instructions
- Each trustee and each individual establishing an Inter Vivos Revocable Trust whose income and assets are used to qualify for the mortgage must separately execute the note and any necessary addendum.
- Security instrument
- The trustee(s) of the inter vivos revocable trust also must execute the security instrument and any applicable rider (if used).
- Each individual establishing the trust whose income and assets are used to qualify for the mortgage must acknowledge all of the terms and covenants in the security instrument and any necessary rider (if used), and must agree to be bound thereby, by placing his or her signature after a statement of acknowledgment on such documents.
- Any other party that Fannie Mae requires to sign either the promissory note or the security instrument also must execute the applicable document(s).
- Revocable Trust Rider
- The use of a revocable trust rider avoids ambiguities for mortgages made to inter vivos revocable trusts by clarifying who is considered to be “the borrower” with respect to any given covenant in the security instrument.
- If the mortgage is secured by a California property, the Underwriter should use Fannie Mae’s sample rider.
- If the mortgage is secured by property located in another state, the Underwriter should use a rider that has been appropriately modified to reflect the requirements of that state (unless the Underwriter determines that use of Fannie Mae’s sample Revocable Trust Rider is appropriate for the specific state).
- In lieu of a Revocable Trust Rider the Underwriter may either:
- Amend the security instrument to include appropriate definitions and language similar in substance to Fannie Mae’s sample rider, or
- Use the standard security instrument without such an amendment or the rider.
- Hold Harmless
- For a mortgage secured by a property located in a state other than California, or in the case of a California property where the rider was not used, the Seller must hold RRAC harmless should foreclosure proceedings later have to be initiated to acquire the property and RRAC suffers a loss that relates either to the modifications the Seller made (or the inappropriate use of the FNMA sample rider) or to any ambiguity in the application of the covenants in the security instrument.
- In such cases, the Seller must either repurchase the mortgage or the acquired property or make RRAC whole.
- Signature Requirements
- Signature Requirements for Notes and Mortgages involving Inter Vivos Revocable Trusts can be found in the FNMA or FHLMC Seller Guides. These include the form of signature for the trustee(s) and the statement of acknowledgment for each individual establishing the trust whose income or assets are used to qualify for the mortgage.
- If vesting is held in the name of an inter vivos revocable trust, a Trust Rider applicable to the state of origination should be executed by the designated trustee and acknowledged by each individual establishing the trust whose income and assets are used to qualify for the mortgage (i.e. the borrowers(s).
|Power of Attorney per Fannie Mae Guidelines
- 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.
- 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; or 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.
- 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.