Is your Power of Attorney Powerless?

It’s down to the wire and your loan is ready to close. Your title is ready, your underwriting conditions are met, and the appraisal and survey have been approved. This is it! You are finally going to close this transaction. You call your borrower to schedule the closing only to find that one of the borrowers decided to take a two month vacation to Zimbabwe! Of course, the lock expires in three days….what do you do? The light bulb goes off in your head. I will use a Power of Attorney!

As brilliant as a Power of Attorney sounds as your silver bullet solution at this point, there is still a lot that goes into the use of one. The mortgage underwriter has to review the POA, but also the title company has to review and approve the POA as well. It seems the latter part is overlooked 99.9% of the time, so please keep in mind that surprising an escrow officer with the use of a POA will stop your closing!

Today title insurance company underwriters examine everything a little closer, and it makes the rules for approval a little tighter on a POA. For example, a medical power of attorney may negate a letter from a medical doctor stating that the patient is competent enough to execute the POA. Or a military POA may require a notary by a commissioned officer and a letter stating the principal is alive and well. If a Power of Attorney is used in a home equity transaction, it has to be specific to the transaction detailing lender, loan amount, etc.

If you are using a power of attorney, have the title company review it IN ADVANCE and BEFORE closing to avoid delays; otherwise your Power of Attorney may be deemed powerless!