As previously announced, FHLMC has incorporated some of their temporary requirements imposed due to the COVID-19 pandemic into their “Single-Family Seller/Servicer Guide”, making such requirements permanent. Among these are the requirements for an employee of the lender or settlement agent to explain to the borrower the terms of the loan, when a power-of-attorney is used to close the loan.
FHLMC Single-Family Seller/Servicer Guide § 6301.4 has been amended to require the following:
“For all Mortgages with Application Received Dates on or after January 4, 2021, the Seller must comply with the following power of attorney requirements. Sellers may also choose to implement these requirements for Mortgages with Application Received Dates prior to January 4, 2021: . . .
After the finalized Closing Disclosure has been delivered to the Borrower but prior to closing, an employee of the originating lender or settlement agent must explain and discuss the terms of the Mortgage and use of the POA with the Borrower to confirm that the Borrower understands them. This discussion must take place in person, telephonically or using a video conference system and must be memorialized in an acknowledgment by the Borrower of his or her understanding of the terms of the Mortgage. The acknowledgment (i) may be in writing or in a recording of the telephonic or video discussion, (ii) must be retained in the Mortgage file, and (iii) must be made available to Freddie Mac upon request. If the discussion is done using a telephonic or video system, a transcript of the recording or the Borrower’s written acknowledgment of the content of this discussion may substitute for a copy of the recording itself in the Mortgage file.” (emphasis in the original)
We created Cx23852 for the temporary requirements (see https://compliance.docutech.com/2020/04/09/new-document-explanation-of-loan-terms-poa-cx23852/ and https://compliance.docutech.com/2020/06/10/configuration-updates-configuration-change-to-explanation-of-loan-terms-poa-cx23852/) and will continue providing it for these permanent requirements. A key difference, however, between the two is that the former applied to all mortgages except cash-out refinances and Texas 50(a)(6) loans (see FHLMC Bulletin 2020-8), while the latter applies to all mortgages.
As a result, we will be changing the configuration of this document so that it will print for all loan purposes if a loan, which involves a POA, is intended to be sold to FHLMC. It will continue to print only for purchases for these types of loans if it is intended to be sold to FNMA. The new conditions are as follows:
Condition 1:
Base Type = Conventional
Loan Purpose = ConstructionOnly
Loan Purpose = ConstructionToPermanent
Loan Purpose = Purchase
Document Package Type = Closing
Power of Attorney (POA) on Loan = Yes
Documents To Use = Fannie Mae
Condition 2:
Base Type = Conventional
Loan Purpose = Allow Any
Document Package Type = Closing
Is this a Texas Home Equity Section 50(a)(6) loan? = Allow Any
Power of Attorney (POA) on Loan = Yes
Settlement Agent Limited POA for Note Indicator = Allow Any
Documents To Use = Freddie Mac
Condition 3:
Base Type = Conventional
Document Package Type = Closing
Settlement Agent Limited POA for Note Indicator = Yes
The actual content of the document will not change, other than the addition of a citation to Supra.
These changes will take effect immediately. If you have any questions or concerns about these, please contact Client Support at 1.800.497.3584.
DR 334540