Many families ask this question when a homeowner wants a reverse mortgage but is unable to handle all the paperwork personally. The answer is yes, a Power of Attorney (POA) may be used in certain circumstances, but there are strict requirements that must be met.
A Power of Attorney allows one person (the attorney-in-fact or agent) to act on behalf of another person (the borrower). However, a reverse mortgage lender cannot simply accept any POA. The document must be carefully reviewed to make sure it gives the agent the proper authority.
Generally, the Power of Attorney must:
- Be durable, meaning it remains effective if the borrower becomes incapacitated
- Give the agent authority to encumber real property and handle mortgage-related transactions
- Have been executed while the borrower was still legally competent
- Have been signed before reverse mortgage counseling and loan application
- Meet all state legal requirements
- Be approved by both the lender and the title company
A temporary Power of Attorney is generally not acceptable for processing a reverse mortgage, except in limited situations, such as being used solely for the closing process.
One of the most important considerations is timing. If a homeowner is already incapacitated and does not already have a valid Power of Attorney in place, a family member usually cannot simply create one. In those situations, legal advice may be necessary, and a court-appointed conservatorship may be required depending on state law.
The borrower must still complete the required HUD-approved reverse mortgage counseling process. The lender will determine who must participate and sign required counseling documents based on the borrower’s circumstances and the specific Power of Attorney being used.
At closing, the attorney-in-fact will typically be required to sign a POA affidavit and execute the loan documents according to the wording of the Power of Attorney. The signing is usually completed in a format such as:
Jane Smith, by John Doe, her attorney-in-fact
where Jane Smith is the borrower and John Doe is acting under the Power of Attorney.
Because reverse mortgages involve a borrower’s home, lenders, title companies, and attorneys take these requirements seriously. If you believe a Power of Attorney may be needed, it is best to discuss it with your reverse mortgage professional early in the process to avoid delays.
Planning ahead can make the reverse mortgage process much smoother for everyone involved.
Douglas Jones nmls 286668
Certified Reverse Mortgage Specialist
