Reverse Mortage and Power of Attorney - Bad Combo
I suppose I should start out by saying that just because something makes sense to you, doesnt mean it does to someone else.
Ill bet you think that I just made a common knowledge statement. You just stated the obvious cowboy, give me something original.
A Power of Attorney has never been straightforward in the real estate business. Typically, an individual will have a general power of attorney, and the title company will make the person switch it to a power of attorney that is exclusively for real estate.
Its a little bit of work, but it all works out in the end.
A new customer of mine, actually a married couple and mother, needed a reverse mortgage recently. It was the brother of the wife who had power of attorney for mother. Mom is mentally incapacitated and cannot sign legally.
The husband, wife and mom are all on title. The goal was to take cash out of the home to make some home improvements and pay for medical treatment.
There didnt seem to be an issue initially, but then it reared its ugly head: Title companies no longer issue title insurance when a POA is involved. The Texas Department of Insurance put an end to this.
Now, you have to ask the question, what is the point of the power of attorney in the first place? This is a legal document designed such to accomplish legal matters just as these folks are trying do.
To the insurance big-wigs in Texas, issuing title insurance as in the example above wont wash. It doesnt seem fair, but there it is.
I dont think it takes a rocket scientist to understand whats going on. Im guessing were seeing a rash of lawsuits between siblings and the title companies issuing title insurance are done with it.
A power of attorney with a legal guardianship wont even make them happy.
There does not seem to be a viable solution to the problem. This is a serious issue for my would-be borrowers. How it works itself out remains to be seen.
Ill bet you think that I just made a common knowledge statement. You just stated the obvious cowboy, give me something original.
A Power of Attorney has never been straightforward in the real estate business. Typically, an individual will have a general power of attorney, and the title company will make the person switch it to a power of attorney that is exclusively for real estate.
Its a little bit of work, but it all works out in the end.
A new customer of mine, actually a married couple and mother, needed a reverse mortgage recently. It was the brother of the wife who had power of attorney for mother. Mom is mentally incapacitated and cannot sign legally.
The husband, wife and mom are all on title. The goal was to take cash out of the home to make some home improvements and pay for medical treatment.
There didnt seem to be an issue initially, but then it reared its ugly head: Title companies no longer issue title insurance when a POA is involved. The Texas Department of Insurance put an end to this.
Now, you have to ask the question, what is the point of the power of attorney in the first place? This is a legal document designed such to accomplish legal matters just as these folks are trying do.
To the insurance big-wigs in Texas, issuing title insurance as in the example above wont wash. It doesnt seem fair, but there it is.
I dont think it takes a rocket scientist to understand whats going on. Im guessing were seeing a rash of lawsuits between siblings and the title companies issuing title insurance are done with it.
A power of attorney with a legal guardianship wont even make them happy.
There does not seem to be a viable solution to the problem. This is a serious issue for my would-be borrowers. How it works itself out remains to be seen.
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posted by Credit Counseling at
1:02 PM
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