Power of Attorney & Mortgage Lending: A Complete Guide for Borrowers


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What Is a Power of Attorney?

A power of attorney can be a handy tool throughout the process of buying a home property. Here’s what you simply need to know about a power of attorney for a mortgage. 

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Author: Stan Faulkner, Founder, Perigon Legal Services, LLC

Mr. Faulkner is an experienced counselor and litigator with 15 years of experience, having held bar licenses in four states (Mo, Il, Ct and Ga). Stan Faulkner uses this experience and focuses his skills in the pursuit of assisting individuals in probate (trust and estate) matters, guardianships and conservatorships, estate planning, business disputes and contract disputes. Published on December 06, 2021.

A power of attorney (POA) is a legal document that gives individuals the power to act for another person on their behalf. 

The person granted this honor is known as an agent or an attorney-in-fact. The person giving out the power is known as the principal. Powers of attorney are important documents that frequently appear in real estate transactions. 


Who Has Power of Attorney in a Mortgage?

The agent is the person who has power of attorney in a mortgage transaction. This can be anyone, but it’s best to choose someone you can trust to act on your behalf. Most people choose a spouse or other close relative to take on this authority.

The principal will determine the amount of authority they wish to pass on to the agent. They may be given limited or unlimited authority to decide on behalf of the principal on their property, medical care, finances, or investments. A power of attorney document automatically terminates when the specific purpose is concluded and completed.

How to Get Power of Attorney for Mortgage

When it comes to a mortgage, power of attorney documents are typically used for the following reasons: 

  • If it is more convenient for the agent to sign because the borrower lives far away and wants to avoid traveling back and forth
  • If the borrower is out-of-town on a business trip
  • When the borrower cannot sign loan documents or any other documents due to mental or physical disabilities

To obtain a power of attorney for a mortgage, all you need to do is get the document drafted and signed by the required parties. However, because this is a legal document that relinquishes some of your rights to another person, it’s a good idea to get help from an estate lawyer before signing. This will ensure that you only hand over the rights necessary to finalize the mortgage with the lender.

How to Get Power of Attorney for Reverse Mortgage

When it comes to reverse mortgages, lenders are often skeptical of power of attorney (POA) documents as they increase the likelihood of fraud and risk for the lenders

For that reason, most lenders require extensive documentation of a power of attorney from borrowers. These lenders carefully examine each proposed power of attorney to ensure that it is valid for the specific purpose it intends to do before issuing out mortgage loans to the clients.

You may get a power of attorney for a mortgage by having an individual who willingly and knowingly grants it to you in a signed legal document and who can consider your financial interest. 

When trying to get a power of attorney (POA) for either a standard mortgage or a reverse mortgage, you need to first decide on the various types of powers of attorney you may wish to have. You can also contact a last will and testament Georgia lawyer with experience helping clients with real estate matters to ensure that your power of attorney and mortgage plans are compatible and perform their specific purpose. 

Requirements to Get Power of Attorney for a Mortgage Loan

For you to obtain a power of attorney mortgage, the law provides that you must be a ‘natural person’ with the capacity to contract and execute a power of attorney. 


What Do I Need to Get Power of Attorney for Mortgage?

Power of attorney mortgage policies may differ among lenders. Here are some of the requirements needed to get a power of attorney:

  • The power of attorney mortgage must contain the dates of the execution.
  • The power of attorney (POA) is acknowledged and signed by two witnesses or the notary public. In the case of the two witnesses, the two will also have to sign.
  • It is also essential to understand the Federal Housing Finance Agency, which provides supervision, regulation, and housing mission oversight of Freddie Mac and Fannie Mae
  • Make sure to protect yourself with a durable power of attorney (POA).
  • Make sure to produce an approved and executed power of attorney for your mortgage, which has been recorded following the lender’s requirement.

Why Having Power of Attorney for Mortgage Is Important

A well-prepared power of attorney can be a convenient way to close mortgage loans. However, many borrowers wonder, why would you need a power of attorney to refinance or purchase a home property, considering the amount of power in simple loan documents?


Reasons Why You Will Need a Power of Attorney When You Purchase or Refinance a Home Property

The thing is that real estate transactions can be complex. Here are some other reasons you need to execute a power of attorney (POA) before buying or refinancing a property with a mortgage loan.


If You Are Miles Away

Traveling back and forth can be overwhelming. If you cannot be physically present to sign documents, the sale will not close, so to save yourself from all this trouble, opting for a power of attorney will save you all this hassle and disappointment. A power of attorney mortgage is important as it can be used by any borrower who is unable to avail themselves to sign mortgage loan documents.

If Other Owners Also Own the Mortgage

Suppose you signed the mortgage with other borrowers, and now you want to sell the property. With a power of attorney from each borrower, one owner can sell the property on behalf of the rest instead of going through all the hassle to sell the property as a group.


Family Concerns

If your parents happen to give you a financial power of attorney, and now you are left to take care of one or more of them who is incapacitated, you can sell your family mortgage or property and access their accounts with a power of attorney and sign documents for them. It’s best to speak with an experienced elder law attorney before attempting this.

Where to Get Power of Attorney for Mortgage Loan in Georgia

Deciding whether to grant or accept a power of attorney mortgage can be stressful. It is wise to wait to complete this process until you are confident that you are willing to hand over such power to someone else. A knowledgeable estate planning lawyer who assists borrowers with executing a power of attorney can help.

Similarly, lenders who close loans through a power of attorney should always have legal counsel to determine the best way to look at the mortgage loan and verify that it has been properly prepared. 

On that note, Perigon Legal Services regularly prepares and reviews powers of attorney for a range of clients involved in property transactions, including lenders and borrowers. If your POA does not meet the lender’s requirements, we will help you navigate the next course of action to ensure the quick and efficient finalization of your loan or purchase. Contact us today to get started.

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