Power of Attorney (POA) Rules for Loans, Mostly VA
When I was getting into doing loans, a mentor told me to keep a notebook of "Things I Know" to combat the feeling of not knowing anything. That was three years ago, and it has helped tremendously.
From the past three years, here are "Some Things I Know about Powers of Attorney:"
- Check that the person giving someone else POA (the "giver") used their legal name as it appears on their identification.
- If the giver had a name change (marriage, etc.), have the giver use their current legal name on the POA and not some version of their current legal name along with a maiden or former name that is no longer their name, even if the former name is in parentheses.
- Using a middle initial instead of a full middle name for both the giver and the user of the POA will help the person signing for the giver because it takes less time than to spell out the full middle name the many times that the full names would need to be signed on the loan documents.
- Check that the date that the giver signed the POA matches the date that the notary says that the giver appeared in front of the notary and signed.
- Check that the notary stamped the document; some POA forms say they do not require a stamp, but title company in a recent transaction made a big issue out of this, so it's easier to have the notary go ahead and stamp it.
- The person needs to give a Special Power of Attorney that allows the specific property address to be inserted.
- Yes, a General Power of Attorney says the person can handle/buy/sell real estate, but lenders won't take the General Power (I'm in California), so save yourself and your client some time and whenever the issue is raised, have them get a Special Power of Attorney. Lenders' reason is that the buyers of the loan in the after market refuse to buy the loans that don't have Specific POAs.
- Spell out the property address in full: street number, street name and type (street/lane/etc.), city, state and zip code; do not leave off the portion such as Drive or Lane, and spell those out in full.
- Check that the notary spelled the POA-giver's name correctly.
- The original ink-signed copy of the POA will need to be provided by the signer to the notary, who will give it to the escrow to have recorded with the grant deed, so warn the person using the POA to bring the original to the doc signing. It can be overnighted to escrow, but why have anyone take on the expense or hassle? The original will be sent back by the county some weeks later, but the person using the POA should keep a copy as the original POA is not certain to return in a timely fashion.
- If the giver is sending the POA from far away (i.e., the person signing for the giver found the house after the giver left the US), have the giver email or fax a copy of the original so that the copy can be reviewed by the lender and escrow before everyone waits for the hard copy of the original to arrive two weeks after sending (currently it's two weeks for mail to arrive from Afghanistan). That way, if the POA is not acceptable to the lender or to the title company, the giver can do a new one and get the new, acceptable POA into the mail, saving weeks on the process and likely not being the item that holds up the fund/close date.
You can use this list to review any POA and get the giver to fix it before waiting for the lender/title to review it. Still, the most important thing to do when getting a POA from a borrower is to get it emailed to the lender and escrow and have them give it their blessing ASAP so you know that hard copy coming in the mail will be GTG (good to go) when it arrives. That is, don't wait for all the other Prior-to-Doc conditions to be in; rather, ask your lender rep to hand carry the POA to the responsible person at the lender and get it signed off and ask the escrow to do the same with the title company. This saves time for all the parties and hassle for a POA-giver who has other things to worry about when they are out of country.
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