Using Power Of Attorney With VA Loans
Imagine a situation where a currently serving military member started the home buying process but got deployed to a war zone before the deal could be closed or before completing some other critical part of that process? How can a VA loan applicant finish the journey when he or she is not present to sign paperwork or close on the loan?
In such cases, using a power of attorney may be the right answer. According to the VA Lender’s Handbook, a power of attorney can be used as long as certain requirements are met. “VA will allow a veteran to use an attorney-in-fact to execute any documents necessary to obtain a VA-guaranteed loan. This enables active duty service persons stationed overseas, and other veterans who cannot be present to execute loan documents, to obtain VA loans.”
That information is found in Chapter Nine of the VA Lender’s Handbook, which adds:
“The veteran must execute a general or specific power of attorney which is valid and legally adequate. The veteran’s attorney-in-fact may use this power of attorney to apply for a Certificate of Eligibility and initiate processing of a loan on behalf of the veteran. To complete the loan transaction using an attorney-in-fact, ensure that the general or specific power of attorney complies with state law to the extent that:
- The mortgage can be legally enforced in that jurisdiction, and
- Clear title can be conveyed in the event of foreclosure.”
Chapter Nine also says the VA needs the applicant’s consent to these things in writing. Consent may be given in writing by meeting one of the following requirements:
- The veteran’s signature on both the sales contract and the Uniform Residential Loan Application, as long as the veteran’s intention to obtain a VA loan on the particular property is expressed somewhere in those documents, or
- A specific power of attorney or other document(s) signed by the veteran, which encompasses the following elements:
- Entitlement — A clear intention to use all or a specified amount of entitlement.
- Purpose — A clear intention to obtain a loan for purchase, construction, repair, alteration, improvement, or refinancing.
- Property Identification — Identification of the specific property.
- Price and Terms — The sales price, if applicable, and other relevant terms of the transaction.
- Occupancy — The veteran’s intention to use the property as a home to be occupied by the veteran (or other applicable VA occupancy requirement).”
State law may affect a borrower’s use of power of attorney. It’s best to speak with a legal expert to learn what might apply in your state.