Power🥃 of attorney (POA) may be necessary to apply for a reverse mortgage if a homeowner is mentally incapacita💟ted or if they otherwise want someone else to handle their finances.

Tapping into home equity via a 澳洲幸运5开奖号码历史查询:reverse mortgage is a way older homeowners 澳洲幸运5开奖号码历史查询:can alleviate cash flow issues, and the money generally doesn’t need to be paid back until the borrower moves out, sells the home, or dies. However, it is dif🦹ficult to access and manage this process when the homeowner is no longer of sound mind. Federal law permits the use of power of attorney to apply for a reverse mortgage on someone else's behalf, but some lenders may ask for more documentation than the law requires.

Using Power of Attorney (POA) for a Revไerse Mortgage

Nobody likes to think that there may come a day when they’re no longer capable of handling their own affairs. However, it can happen, and—foౠr the sake of your financial well-being and next of kin—it generally 🌄helps to accept this sad fact of life before it is too late.

With a 澳洲幸运5开奖号码历史查询:power of attorney (POS). your child or somebody else whom you trust can immediately step in and manage your finances should you be deemed no longer mentally competent. This could include shopping for a reverse mortgage to ensure that 澳洲幸运5开奖号码历史查询:there will be enough money for you to enjoy a stress-free 澳洲幸运5开奖号码历史查询:retirement without selling your home.

There are two cases in which POA may be necessary when applying for a reverse mortgage:  

• The homeowner is mentally incapacitated.
• The homeowner is of sound mind but no longer wants to think about managing their finances and is happy for their appointed agent to handle this going forward.
  

The Rules

Lenders are generally skeptical about POAs because they have been misused in the past and can potentially be fraudulent. So, while federal law permits them to be used on an older person’s behalf for a home equity conversion mortgage (HECM)—the most common type of reverse mortgage—a POA won’t be accepted unless the following requirements are met:

• The agent placed in control of acting on the homeowner’s behalf provides the lender with a copy of a legally valid POA document.
• The POA must be “durable,” meaning that it remains valid when the homeowner becomes incapacitated.
• The POA specifically authorizes the agent to manage real estate transactions.
• The agent submits two forms of identification as well as proof that the homeowner was competent at the time that the POA was executed.
  

Doctor’s Note

The U.S. Department of Housing and Urban Development (HUD) does not specifically reveal how to prove that the homeowner granted POA to the agent before becoming incompetent. However, most lenders agree that the only way to verify this is by submitting a letter from the subject’s attending physician stating that they are no longer able to handle such transactions and arrived at this condition after the POA was executed, witnessed, and notarized.

Meeting this requirement could be an issue if the physician of that period can no longer be contacted, perhaps due to death or retirement, and if the homeowner’s medical records, accessible to the current doctor, don’t provide a date for when full competency was lost. Should these particular events unfold, the lender may not accept the POA and ask for a court-ordered 澳洲幸运5开奖号码历史查询:conservatorship to proceed with the reverse mortgage transaction.

POA vs. Court-Ordered Conservatorship  

A reverse mortgage lender won’t accept a POA without proof that the homeowner was of sound mind when it was executed. Because the document must be 澳洲幸运5开奖号码历史查询:notarized, it’s not possible to get a POA unless the principal is fully aware of what is going on.

Yes, it can be infuriating dealing with these types of inconsistencies. However, remember that lenders create these barriers to protect their client’s interests, and that not pro𒅌viding the documentation that lenders want will likely mean having to go to court to secure conservatorship.

It’s best to avoid this path if you can. A court-appointed conservatorship guardianship will get you the same results, but it is a time-consuming process that can be expensive and invasive.

Be Careful Whom You Choose

A POA can alleviate a lot of stress, 澳洲幸运5开奖号码历史查询:but 🌳it must not be executed in haste. Think carefully about to whom you would like to give your POA before taking action. Your agent can be a licensed professional, such as a financial planner or an elder law or estate-planning attorney. In any case, you must trust this person and be sure that they will act in your best intere﷽st at all times.

Sadly, not everyone behaves honorably when money is on the line. There have been countless occasions of 澳洲幸运5开奖号码历史查询:financial elder abuse, including when children and other people entrusted to handle an older person’s affairs have secured reverse🔜 mortgages and then diverted all the proceeds into their own bank accounts.

The Bottom Line

POAs are a sensitive topic. On one hand, it makes sense for everyone to elect a person to take over their affairs in the event that they lose their faculties to ensure the best results for them and, eventually, their heirs. On the other hand, pressuring people to take this path can be dangerous and result in individuals not capable of putting aside t🙈heir personal interests being given the authority to destroy the finances of others.

It’s best to have someon💟e in your life whom you trust to look after your finances and respect your wishes. If that’s the case, it might be wise to get the right POA documentation drawn up by a licensed attorney before 𓆉it’s potentially too late.