HUD 4000.1 outlines specific policies from FHA lenders approved to issue FHA-backed loans; these requirements are in addition to any local laws or regulations that may also apply to those lenders.
Borrowers should be aware that all required loan documents must include original signatures from the borrower, co-borrowers, and any other persons whose name is included on the loan contract. This includes any required signatures from parties who are not the borrower but whose name is listed on the loan application or loan documents. In order for a signature to be valid, it must be placed in black ink.
In cases where there is a third-party originator, such as a broker or correspondent, involved in the transaction, all involved parties must sign and date the HUD/VA Addendum to the Security Instrument. This Addendum is part of the FHA loan package and must be included with the loan documents. In cases where a mortgage broker is used, the signature of the lender accepting the loan must also be included on this document.
The FHA also requires lenders to execute each applicable document with a corporate seal. Any document which the lender is expected to sign must also contain the name of the lender, corporate title of the signing official, and capacity in which the signing official is signing. The FHA also requires that all forms signed by the lender that require notarization be properly notarized.
For borrowers or co-borrowers who are unable to appear in person at loan closing, the FHA allows the use of “wet signatures” if the signature is authorized by an FHA-approved consultant and forwarded to the loan closing agent prior to closing. The loan package must also include a signed power of attorney authorizing the consultant’s authorization of the signature.
In summary, FHA loan rules as outlined by HUD 4000.1 require borrowers to sign all loan documents in black ink and provide original signatures. If a third-party originator such as a broker or correspondent is involved in the process, then they and the lender must sign the HUD/VA Addendum to the Security Instrument. This document must also be signed and dated by the lender along with a corporate seal. Borrowers who are unable to appear in person at the loan closing may provide wet signatures, so long as they are authorized by an approved consultant and are accompanied by a power of attorney. These requirements serve to protect both the lender and the borrower and ensure truthful and valid documents are created for every FHA loan.
This article was contributed on Oct 22, 2023
