Power of Attorney and VA Loans
Power of attorney can be a very powerful tool when it comes to legal documentation. It essentially means that someone, usually a lawyer, is given the authority to act in your place regarding a specific legal action. There are many reasons why you might want to exercise power of attorney, including not being physically present for a negotiation or signing. Fortunately for veterans, power of attorney extends to loans backed by the Department of Veterans Affairs (VA).
Houses are long-term investments, so if you find the right one for you you'll most likely want to strike while the iron's hot. Watching the perfect house slip away because you can't be present for the necessary signing can be devastating. Fortunately, power of attorney can prevent that from happening.
According to Pioneer Journal, the VA allows power of attorney for VA loans when buying a house. This allows active duty service members to begin the purchasing process before they transition out and overseas veterans to purchase a home in the U.S. While this is a strong resource for veterans, it comes with some fairly strict regulations. According to VA:
- The veteran must execute a general or specific power of attorney (POA) 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.
- The power of attorney may be used under different legal constraints depending on what state it's used.
- The power of attorney must comply with state law.
- The power of attorney must be legally enforceable in that state.
- Clear title must be conveyable in case of VA loan default and foreclosure.
While this might sound intimidating, the guidelines aren't tricky or complex. If you're working with a competent attorney, they should fulfill the majority of these requirements or at least know if they don't.
But, another key detail in successful use of power of attorney is that veterans "provide written consent to the specifics of the transaction." This can be given on the sales contract and Uniform Residential Loan Application as long as there is a clear statement of intention to use the VA loan on a particular property.
Other documents are permissible, but they must include:
- 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).