Tag Archive: POA

Oct 27

Mortgage Helpful Hint #8

 

You and Your Money are Both Needed at the Closing.

 

If everyone that is signing the note and mortgage live in the town where the closing is taking place then they need to attend the closing.  One of the most common questions asked by both buyers and sellers is how do I get a Power of Attorney for the closing? You don’t. 

We do not want a signatures by Power of Attorney (POA) on the note and mortgage, original signatures only!!!  The only exceptions are out-of-town work assignments.  If you are in the military stationed overseas that would be a valid issue.  If you just don’t want to attend the closing that isn’t good enough.

All of us have worked very hard to get to this point so the closing isn’t a surprise.  You must attend the closing in person even if it requires taking off from work.  If you have small children get a baby sitter.  We love kids too but you are signing some very important documents, pay attention.  The $20 of missed work or paying a baby sitter pales in comparison to messing up the closing on a mortgage.  It deserves your undivided attention for about 30 minutes to an hour.  Redrawing all of the mortgage documents can take days, do not let this happen to you.

If your money is in out-of-town bank account it can take a few days for the money to arrive once you start the process.  A large deposit from an out-of-town institution to your local bank account might cause your local bank to freeze your account until the funds have cleared.  This will stop everything, don’t wait until the very last-minute to assemble the cash needed at closing.

But remember, don’t move money around without my help, all funds must be sourced.  There are right ways and wrong ways to move money, let’s keep your stress level low by doing it correctly the first time.  

 You and your money are both needed at the closing!!!

Please send a link to this page to any of your friends and family that are planning to buy or refinance a home.  They’ll be glad you did.

 

Aug 05

Power of Attorney Epidemic

POAs in Louisville Kentucky

Just for fun I searched the Jefferson County Clerk’s online database to see how many Power of Attorney documents there are in the public record.  Okay, I can’t count that high, but it is easy to get an idea by searching for a particular time period.  This is how I searched, first, selected to search by Party Name but left the name boxes blank, selected date(s) to search and in the Doc Type box scrolled down to POA.

If you are searching a large time line there are five listings per page, so just add 5 for every click on the Next Page link.  I looked at a recent random week, Monday to Friday and drum roll, there were 214 document tabs.  Each document will have at least two names, so the 214 listings probably represents 107 Power of Attorneys.  It is possible for one individual to name more than one Attorney-in-Fact but most do not.  Now that I think about it, naming more than one individual and requiring both to sign is a good safety measure.

Let’s go with 107 POAs filed in one week.  That means that slightly over 21 people per day signed away some of their rights to another individual.  Many of these were elderly individuals handing over their assets to the care of a child.  Some of them will be ripped off by their own children.  Ask any bank teller, adult children frequently steal money from their parents, it is a dirty little banking secret.  Why don’t you see it in the news every day?  Because the parents refuse to prosecute their children.

That Mushroom Cloud is not a Nuke, it’s POAs

I have been writing about this a lot lately because almost every deal I close one side or the other tries to use a Power of Attorney instead of attending the closing themselves.  It is a very strange phenomenon, why the explosion of POAs this year?  Something has shifted, I have been asked about using a POA more times in the last six months than the previous 20 years combined!

I do not want the mortgage and note signed with a POA, period. With all of the trouble in the last couple of years with the validity of mortgage documents no lender in their right mind wants the borrower to skip signing the note.  That is crazy!

What I think is going on is a combination of several factors that have never coincided in the recent past if ever.  A decrease in property values in some areas, a decrease in the number of qualified buyers, cash flow problems on both sides all add stress to a real estate transaction. Add to that a very high unemployment rate and some people that have jobs are simply scared to miss even an hour of work for something as important as buying a home.

Jul 15

Power of Attorney AKA POA

What is a Power of Attorney?

A Power of Attorney is a written document authorizing one individual, referred to as the Attorney in Fact to act on behalf of another regarding legal matters like signing a contract, deed or other instruments.  The signature of the Attorney in Fact is binding on the part of the individual that conveyed the POA.  There are different forms of POA’s, they can be general and all inclusive or specific for a single transaction.  They must be notarized to be binding.

In theory, when an Attorney in Fact signs on behalf of another it is the same as if the individual signed for them self.  Obviously a POA is a very unique document and requires attention to detail not only in content but in form as well because the agreement signed using one is binding on the party that is not signing on their own behalf.   If a mistake is made it could be a binding error.

When to Use a POA

You should not use a POA unless absolutely necessary.  If a contract or document is important enough to require a signature it should be signed by the individual that is bound by the terms of the agreement.  There are times when this is not possible, that is when one should be used.  For example, an individual that is in the military and is stationed overseas would not be able to attend a real estate closing back home, a POA would be required if the closing is to proceed.

Other examples of when a POA is appropriate would be for an individual that is senile or incapacitated by illness or injury to the point they are not able to conduct their affairs.  In events like these it may be necessary to obtain a court order appointing a relative Attorney in Fact or some other legal capacity.  Another example, in the event of relocation where one spouse moves in advance while the other remains behind to complete the sale of their home.  There are many circumstances when using a POA is appropriate.

When Not to Use a POA

A power of Attorney should only be used if you can absolutely not be present for signing the agreement.  I am not an expert in legal matters, only those regarding the real estate mortgage process.  In the past year I have had more buyers and sellers inquire about using a POA than in the previous 20 years combined.  This is very strange.

In every case this year the request to not attend a closing was not because of distance but simply because they individual did not want to attend the closing.  It doesn’t matter what you would rather do, nothing is more important financially than a real estate closing.   Think about it, if you earn $20 an hour compared to buying or selling a $150,000 house, which is more important?  Take a long lunch hour or use a sick day and attend in person.

One lady that was selling a home told me she just didn’t want to be in the same room as the buyers.  Okay, I can understand that, but there are other ways to accomplish non-contact.  Recently I had a buyer in one room the sellers in another room and the Realtors wanted a little privacy for a chat so we put them in yet another room.  That was a first for me.  I have put many divorcing couples in separate rooms but never used three rooms until then.

Using a POA for Real Estate is NOT Automatic

Lenders do not want the buyer or seller to use a POA.  Especially when it comes to the buyer signing the note and mortgage, most lenders want an original signature of the person that is borrowing the money.  Do not assume that you can use a POA as a buyer or seller.  This is something that should be reviewed and approved long before arriving at the closing.

The actual POA document should be reviewed in advance by the closing attorney or Title Company that is going to officiate the closing.  In addition to this step it should also be pre-approved by the lender long before setting a closing date.  Power of Attorneys are custom documents, no two are exactly alike.  There are different types, some are general in nature while others are specifically designed for a single transaction.  A POA for a real estate transaction should be very specific, spelling out who, what, when, where and how.

Obviously, if an attorney is acting on behalf of a title company they will be very picky about the content of a POA.

Who Can Act as Your Attorney in Fact?

The best individual to act as your Attorney in Fact would be your spouse.  Next would be a very close blood relative, a parent or sibling.  Anyone you appoint that agrees to accept the responsibility is allowed as long as they do not have a financial interest in the transaction.  For example, a seller should not act on behalf of the buyer regardless of the relationship.

What about your Realtor?  This is another bad choice because they are receiving a commission from the sale.  It happens, but it is not a good choice and may not be allowed by the lender or closing attorney.

How about a friend or co-worker?  These are not as good as a close relative but are better than the Realtor.  Keep in mind if something goes wrong you are stuck with the consequences.  Is that really something you want to put on the shoulders of a close friend?

Helpful Hints for Using a POA

If you must use a POA have it prepared by the attorney that will close the deal.  This would eliminate the document being rejected by the closing attorney over form or format.   If this is not possible have it prepared and signed well in advance and provide the closing attorney a copy as early as possible, do not wait until the day of closing!

If it is not possible to attend the closing the documents may be sent overnight to the absent party, they can sign in front of a notary and returned to the closing attorney.

I hope this information is helpful.  If you have questions just give me a call, my direct line is (502) 753-4127.  If you found this information interesting please share it with others.