As discussed previously, under FNMA LL-2020-03 and FHLMC Bulletin 2020-8, settlement agents and other persons “connected to the transaction” are permitted to act as an attorney-in-fact for borrowers, as an emergency measure due to the COVID-19 “lockdowns” which prevented the borrower from attending settlements in person. However, in order to prevent any abuses under this arrangement, an employee of the attorney-in-fact must explain the terms of the loan to the borrower and confirm that the borrower understands them. The borrower must then acknowledge that they understand the terms of the loan. We provide our Explanation of Loan Terms (POA) (Cx23852) as one method of obtaining that acknowledgement.
Note, however, that the “acknowledgment” does not have to be in the form of Cx23852 and does not have to be signed, as FNMA outlines in their COVID FAQs as follows:
“The conversation reflecting the acknowledgment by the borrower(s) must be documented either in a written record created by the lender or settlement agent or in a recording capturing the conversation with the borrower. If documented in writing, there is no expectation that the borrower sign the memorialization. In either case, the lender must retain the acknowledgement in the loan file and make it available to us on request.” (p. 16, Q82)
The preferred method from FNMA is a recording of the conversation, or a written transcript of it. Docutech cannot provide either of these methods of acknowledgement, but Cx23852 is provided to be used as desired. Since the acknowledgement does not need to take the form of Cx23852, we are changing the document to Ink Sign by default, to avoid any problems during eSign with Borrowers being forced to eSign a document that many will not need.
This change will be in effect on June 13, 2020. If you have any question or concerns about this change, or if you have alternate methods of satisfying the requirements and wish to set Cx23852 to not print, please contact Client Support at 1.800.497.3584.