Most everyone to who is successful in the reverse mortgage industry has the borrower’s best interest in mind when helping them look at the accessible options available. However, both in the lenders and HUD are keenly aware of fraud that exists, and have therefore deemed some rules necessary for borrowers using a power of attorney. According to a study done by the National Center on Elder Abuse, 60.4% of all perpetrators of financial abuse are adult children, including powers of attorney and trustees of trusts. It's very important to pay close attention to your needs, and the individual situation if you are indeed using a power of attorney or trust.
The type of power of attorney that should be used for a reverse mortgage is a financial power of attorney, not a medical one. A power of attorney is a document that gives one-person legal authority to perform certain acts and/or make certain decisions for another. The person granting the authority is called the principle; a person acquiring the authority is called attorney-in-fact or agent. To be used for a reverse mortgage, an attorney-in-fact needs to have the power to borrow money, encumber real property and execute contracts. Unless the POA specifically allows it, and attorney-in-fact cannot use the power of attorney for self-serving purposes.
There are many types of powers of attorney, but the most common one used for a reverse mortgage is a durable power of attorney, which means the document takes effect upon the delivery and survives the incompetence of the principle. This type of document also becomes void upon death of the principle.
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