America’s #1 Rated Reverse Lender

Hello Viviane,

I can’t give you legal advice, but you may also want to seek advice from an attorney and let me explain why.  I will answer what I can about reverse mortgage issues, but you also have legal questions I am not licensed to answer here.  For example, when you got your reverse mortgage, your lender got information for a bank account to which they could fund advances you requested from your line of credit. That account had to be a joint account in both your and your husband’s names. 

No reverse mortgage servicer should now receive and process a request from your daughter, power of attorney or not, then issue funds from that account to your daughter to a different account than what they have on file.  That should be true even if your husband signed the request asking for the funds to go to a new account without you.

However, I do not know what rights that power of attorney would give her to funds in your joint account with your husband. I can’t imagine any bank allowing her access to funds in a joint account without permission or power of attorney from both account holders, but I don’t know. Keep in mind, though, that your husband is a signer on the account, so he still has access to funds in that joint account.

It’s always tragic and messy when families fight, and as you find out, there may not be any easy answers.  I sincerely hope you can find a way to reconcile with your husband and family, but you should speak to an attorney to determine what steps you need to take to protect yourself.  

Good morning,

I’m sorry, your question is about your legal rights, and therefore, you need to seek competent legal counsel.  We are forbidden by licensing law to give legal advice, and that’s what you need here.

I cannot guess from the information provided if there was any mishandling of your father’s estate by your siblings just from the information here.  There is no way to ascertain whether the funds were needed to pay off other liens/debts, repair the home, pay medical and any other living expenses, or even how long he had the reverse mortgage. 

Perhaps he had the loan for many years and used it to be able to live in the home, I can’t say.  But if you feel that you need a review of the actions, only an attorney can tell you what rights you have based on the terms of the trust/legal documents your father prepared before he passed.

Hello Samantha,

If you want to keep the home, you need to pay off the current loan.  If the home is not worth as much as the outstanding balance of the loan, as the heir HUD will allow you to pay off the loan at 95% of the current value of the home.  

If you do not have the funds and cannot get a new loan but the property is worth more than is owed, your best option is to sell the property to retain the equity.  You need to check to see if the property needs to go through probate and then let the lender know the status if so. If the value is not there and you do not intend to buy at 95% of the current market value, you can walk away and owe nothing.

Hello Stephen,

HUD has specific requirements for the use of a Power of Attorney (POA). 

Those requirements will depend on why the POA is being used, but the HUD rules require that the POA is prepared when the individual is competent to execute it and the only way the lender can be sure the individual who granted the POA was competent at the time he/she did so if the individual is not competent now is for you to get letters from the principal’s doctors stating the date of the onset of the condition which caused the principal to lack capacity. 

If the principal still retains capacity and the POA is being used for other reasons (for example they are not incapacitated but must use a POA for some other reason), then the principal who is also a borrower must sign the mortgage loan application. 

If the POA is unable to obtain the letters required by the physicians of the principal, then the loan could only be completed with a court-appointed conservator or guardian with the appropriate authority to obtain the loan.  The section from the HUD manual regarding the use of POA or conservatorships appears below.

III. POWER OF ATTORNEY/CONSERVATORSHIP GUIDELINES

        A.   Mortgage Loan Application

             1.  Borrowers with legal competency:

                 a.  All borrowers must sign mortgage loan application.

                 b.  Mortgage loan application may not be executed by power

                     of attorney.

             2.  Borrowers lacking legal competency:

                 a.  Incompetent borrower may not sign the mortgage loan

                     application.

                 b.  Court-appointed conservator or guardian may execute

                     any necessary documents, including the mortgage loan

                     application.  The lender must provide evidence that

                     the conservator or guardian has authority to obligate

                     the borrower.

                 c.  An "agent" or "attorney in fact" holding a durable

                     power of attorney specifically designed to survive

                     incapacity and avoid the need for court proceedings,

                     may execute any necessary documents, including the

                     mortgage loan application.

                     (1)  To be valid, a durable power of attorney must be

                          prepared when the "principal" is competent to

                          understand the nature and significance of the

                          instrument.

                     (2)  The durable power of attorney must comply with

                          state laws regarding signatures, notarization,

                          witnesses, and recordation.

        B.   Closing Documents

             Power of attorney (durable or otherwise) may be used for

closing documents.  Any power of attorney must comply with State law and

allow for the Note to be legally enforced in that jurisdiction.

        C.   Counseling Session

             For borrowers lacking legal competency, the counseling session

may be conducted with an "agent" or "attorney in fact" holding a power of

attorney, or with a court-appointed conservator or guardian.

Hello Christina,

That’s not exactly the way it works but the loan would not prevent the heir from doing whatever they want with the property which includes giving it or selling it to a friend.  You just need to remember that the reverse mortgage is due and payable after the borrower no longer lives in the property. 

The heir(s) then have the option to sell the home, pay off the loan and keep the home or walk away and let the bank foreclose if they don’t want to do anything.  If the daughter is the sole heir and has the authority to sell or gift you the home, the reverse mortgage would not prevent such an act but the loan is still due and must still be paid in full or the lender will foreclose to receive payment. 

Also, a Power of Attorney (POA) may not be the only document needed to complete a transfer so I would recommend that you contact an estate attorney to help you with this situation. 

There may be a probate required, if there are other heirs the POA may not have the rights to sell or grant if it affects them and the verbiage in the POA itself might limit the powers or terminate upon the death of the borrower.  I cannot begin to guess what all could be granted or limited and since I am not an attorney practicing in the state, I do not know what state laws might also come into play. 

But the bottom line with the loan is that the heirs can pay off the loan or they can sell the property to you even if that is just for the amount owed on the loan and you can pay it off through the closing but neither of you can assume the debt.  Reverse mortgages are not assumable.  Either the borrower’s estate or their heir(s) still own the home now and they can sell it to anyone they wish, but the loan must be repaid at this time.

Hello Karen,

If one of you has a Power of Attorney that will allow you to take over his finances now and refinance the home you can do that or if not, you may need to seek a court ordered conservatorship which gives you this ability. 

If you do not have this from dad now, you may want to speak with his attorney if he has one and you know how to contact him/her.  Otherwise, any estate attorney can advise you on what steps you need to take.

That is entirely up to the terms of the legal documents that you hold and the authority they give you.  Most Powers of Attorney (POA) that I have seen written to allow families to carry on after a loved one has become incapacitated do contain the powers to sell property but it all depends on what powers your father had the attorney include in this document. 

You can check with an estate attorney if you are not sure but chances are very good that the POA does give you this power now that dad is not competent.  There may be something you need to do though so a single appointment with an attorney may be wise anyway.

Hello Jeannette,

You are asking the wrong entity.  The reverse mortgage is just the loan on the property at the time they passed.  Whatever your sister set up as far as trusts, wills, or legal wishes for her estate in accordance with state laws will determine who gets the property and how, not the lender who holds the loan on the property. 

Did your sister put that in writing in a will or trust?  Does the son recognize that or is he contesting this now?  These are all questions for an estate attorney, and it will depend on what your sister put in place to make her wishes made known and state laws regarding heirship (especially if her son is contesting your claims). 

The lender also does not determine at what price you would purchase the home from your sister’s estate.  That too would be up to the heirs who would legally receive the home, most likely through a probate action.  I would suggest that you talk to your nephew and see if his mother ever made those wishes known to him. 

If she did not and if there are no written instructions to that effect, you could have a problem with the son wanting the property or the proceeds from the sale of the property at current market price.  In any case, the loan is now due and payable, and the heirs will need to determine shortly what they intend to do to repay that loan – pay the loan off with funds available to them, refinance with a new loan or sell the property to pay off the loan. 

Whatever the choice is, the lender would not be the one to decide who gets the property and if your sister died without a will of any kind, it may take a court order to determine who has the right to keep the property and at what terms.  Your questions really need to be addressed to an estate attorney as they are not lender related and we cannot give you legal advice.

Hello Janice,

If dad has a Power of Attorney (POA) for mom that give him this authority, you can just use the POA to handle the sale and the payoff.  If not, mom can still sign one in an American Consulate in either of those countries where they can notarize the document and send it back via over-night delivery.

Hello Linda,

If there are no other doctors who also treated mom at the time with access to her medical records who can sign the necessary letters, then he would need to apply for a court appointed conservatorship. 

The conservatorship must specifically state that he has the right to obtain the reverse mortgage for her.  Many times, people are annoyed at the requirements that HUD has for the use of a Power of Attorney but when you think about it, those requirements protect the borrower, their estate and other possible heirs as well as HUD and the lender. 

Without confirming that the borrower was of sound mind when the Power of Attorney was signed, there would be no way to assure that the borrower was not a victim of elder abuse or that the person using a Power of Attorney really had the right to act on behalf of a now incapacitated individual. 

Many people who lack capacity to make their own financial decisions can still sign their name and unfortunately, there are too many unscrupulous people who would prey on those who did not understand the ramifications of everything they signed if they trust the person asking them to sign a document. 

That is why the conservatorship is more of a hassle but a necessary step if the homeowner’s physician is not available to confirm that the individual was of sound mind when the Power of Attorney was executed.

Hello Billy,

The reverse mortgage is a non-recourse loan.  That means that the only thing the lender can look to for repayment if the borrower cannot repay the obligation (due to death or otherwise) is the property. 

The lender cannot even seek repayment from the borrower’s estate, let alone any heirs (whether you are a POA, conservator or if you inherit the property and gain title that way). 

You have never signed a Promissory Note to the lender promising to pay any amount, so you are not legally obligated to do so and the Note that mom signed specifically has the verbiage in the contract stating that it is a non-recourse loan.  The lender can take the property but if the property is worth less than the amount owed, I do not think that would be a big concern for you.  

And of course, if you do decide you want to keep the home, as the heir of a borrower who has passed, you will have the right to pay the loan in full for the lesser of the amount owed or 95% of the current market value.

Hello Maria,

This is not a question for the reverse mortgage lender but rather for an estate attorney or perhaps a title company and their legal department to answer. 

The lender does not approve or deny you the ability to sell the home, they just need the approval to communicate with you about the loan on your dad’s behalf and issue the Beneficiary’s Demand with your signature on the request for dad based on the POA and it sounds like you have that covered. 

I would advise you to speak with an estate attorney though because I do not believe it would be legal for you to place the title into your name with the POA as that may be prohibited as a self-serving act (as well as completely unnecessary). 

If you have the right to sell the home on behalf of your father, there should be no need to change the title to your name anyway but again, I cannot give you legal advice and would strongly suggest you seek legal counsel to be certain that you act in accordance with the required laws.

Hello Angela,

If she were already living outside the property at the time the loan was closed, she would not have been a coborrower on the loan and therefore, only his signature would be needed for draws, etc. 

And depending on the nature of her incapacitation, there would be the question of whether the spouse could do the loan with her attending counseling and signing off on the paperwork, or if a Power of Attorney would be required or if one would even be acceptable. 

Depending on how long ago the loan was closed, she may have needed to sign off the title to allow him to complete the loan without her participation. 

I would strongly suggest that you obtain legal counsel, have the attorney review the loan documents to determine the terms under which the loan was closed and then also check to see what agreements they had with regard to the property title (if any). 

I simply can’t advise you because I do not have the information and cannot give you legal advice even if I did have more information and it sounds like you may need just that.

Hello Mandy,

The mortgage balance will continue to rise even with no further payments due to the interest accrual even though there will be no further draws on the line. 

The original Principal Limit was the amount originally available to the borrower in the amount of $113,000. 

This amount grows over time on the unused portion of the line so borrowers with the tenure, term and line of credit options often can receive much more than the original amount.

Based on the amount the borrower was able to borrow and the interest that accrued on it, the balance owed on the loan is $192,000. 

That would indicate that to pay the loan off, you would need to pay $192,000 (plus the interest as it continues to accrue) or 95% of the current market value, whichever is less but the lender will give you a payoff statement known as a Beneficiary's Demand.

Modified Term means that the borrower chose to receive a monthly payment and they chose the payment amount, probably in conjunction with a line of credit or lump sum at closing.

 A Modified Tenure would mean that they used a portion of the funds available for a lump sum draw or line of credit and then the remainder of the funds were allocated to a payment for life. 

So yes, they were just payment options.  If it was a tenure though, the payment goes until the borrower passes and if it was a term payment, until the end of the term the borrower chose. 

Even if the borrower had a tenure option, no further payments would be available after the lender became aware of the borrower's passing.  The loan does continue to accrue interest though.

If you have already informed the lender that you intend to keep the home, they should have ordered an appraisal of the property.  As the heir, you have the right to pay off the loan at the lower of the amount owed or 95% of the current appraised value. 

It probably would not hurt you to speak with a senior real estate specialist in the area to get an idea of the most probable selling price of the home as well since that will give you an idea of where the appraisal is likely to come in.

Hope this helps.

Hello Jordyn,

It saddens me when I hear stories of family who put monetary desires over the needs of loved ones and so I really feel bad about your circumstances. 

I cannot however be of any help to you.  I am sorry but I am not an attorney and cannot give legal advice and, in this case, would not even know the answer to your question as it does not pertain to a reverse mortgage. 

For the sake of your grandmother and your mom, I would encourage you to seek the advice of a competent legal professional.

Hello Cheri,

If you father received the loan before he became incapacitated, he had the right to get any loan he wished. 

You said he was diagnosed in 2017 and you found out about the loan in 2019, when did he take out the loan? 

And at what point was he unable to direct his own affairs?  That would be the question the lender, the counselor and everyone would be looking at to determine at the time of the loan if he were eligible. 

He would have needed to pass the counseling as well as work with the lender to obtain the financing and the counselors also “test” borrowers during the counseling session to determine that they are able to understand the information presented in the counseling session.

The second part of your question, can you reverse the reverse mortgage, is simply a matter of paying off the loan either with funds available to you or with a new loan. 

There is no reason you cannot pay the loan off and there is never a prepayment penalty.  The only thing that might stop you would be if you did not have the proper authority to get the loan or did not have the funds available to you. 

For example, you really cannot get a POA if there is not one already in place that was granted to you prior to the incapacitation as you have already indicated that your father now lacks capacity. 

That being the case, he cannot give you power of attorney as he no longer retains the ability to do so if he has been deemed incapacitated. 

However, you probably can obtain a court ordered conservatorship that would allow you to do exactly what you are seeking. 

I would suggest though that you contact an attorney to get the legal counsel so that you get exactly what you need. 

I would also suggest that before you even start on any court process and possibly even before you speak to the attorney, that you contact possible lenders (if you will need to refinance the loan with another loan) and determine what you will need in advance so that when you visit the attorney, you know what your goals are. 

The last thing you want to do is find out after you spend time and resources that the lender will have different requirements than the attorney determines is the best for your oversight of your father’s estate. 

If there are multiple steps that must be taken to accomplish your goals, it would be better to accomplish them at the same time if possible.

Hello Anne,

I am afraid this is a legal question and you really need to consult with an attorney. 

Based on the information given, the owner does not live in the home and so a reverse mortgage is not possible in any event so I would strongly recommend you have an attorney review your entire situation – the Power of Attorney to see if it is enforceable, the actions by the HOA to see if they are over-stepping their bounds and the charges to see if they are excessive and unwarranted if the HOA should have been accepting your payments. 

Only an attorney can answer these for you, and it sounds like you need to know sooner rather than later.

Absolutely.  I would go one step further and have your parents also write a letter to your lender now authorizing them to speak with you and you to them on all matters relating to the loan.

The written authorization allows the lender to speak to you and give you any information you may need now while planning their affairs.

Hello Carmen,

This is one of the great things about the reverse mortgage, you do not have to do anything but get mom situated and contact the lender. 

If you already are authorized to act on mom’s behalf (you have a Power of Attorney that pre-dates her health issues), then you can move mom, take all her possessions from the home and contact the lender and let them know that she has left the property and you would like to give them a Deed in Lieu of Foreclosure. 

As long as you have the legal authority to act with regard to mom’s property, you can tell the lender that you will execute the Deed as her Power of Attorney (POA) and send them a copy of the POA she executed giving you the authority to do so. 

Then it will be up to the lender to determine if they can accept the Deed or if they will require the loan to go through a complete foreclosure. 

Either way though, mom will be out of the property, the lender will take title by Deed in Lieu of Foreclosure or by Trustee’s Deed when the foreclosure is completed, and you do not need to sell the home. 

Be sure you talk to the lender though and understand what obligations you will or will not have during this time because as long as the property still belongs to mom, there can be potential liability if you let the insurance lapse, etc. 

If you have any questions, I would suggest you contact an attorney regarding your legal rights and obligations but as far as the loan is concerned, you will never be required to pay any shortfall from the sale of the property.

Hello Josh,

About “legal”, you would need to contact an attorney to determine if the POA had acted outside of the scope of the powers given to him in the POA document.  I cannot give you legal advice and I do not know what powers were granted to your brother in the document. 

There is nothing in the loan that would prevent him or any other person from contacting a lender to inform them that a borrower had permanently vacated a property so my guess is that it would be a matter of whether he violated his authority as the POA but I cannot tell you that for sure, that advice would need to come from an attorney who practices in this area. 

I can advise you regarding the loan itself.  The timeframes for action once a borrower permanently leave the home depend on the notices given to the reverse mortgage lender or the lender determining the borrower’s move on their own. 

Once  the lender has made this determination or has been notified that your mom has permanently left the property, they will give you a date by which you need to let them know what your intentions with the property will be. 

At that time, you must notify them of your intent to sell the home, pay off the existing loan with funds available to you or by a refinance or if you intend to just let the lender take the home back. 

After you notify the lender of your intent, they will work with you giving you a reasonable time to complete whatever it is that you intend to do.  The lender does not expect you to have the property disposition completed in 30 days, but they do expect you to tell them what you want to do and to have a plan in place to achieve that goal. 

Your mom could have been out of the home for a temporary time period of up to 12 months for medical purposes if they were not sure if this was a permanent situation but if your brother has already notified the lender that her move is permanent, they will start everything in motion from the time they are notified that she has permanently vacated the home. 

If you were involved with the origination of the loan, the lender should have authorizations on file from mom which authorize you to contact them on behalf of the loan. 

I would strongly suggest that as soon as you do decide what you intend to do with the home that you stay in contact with the lender so they do not begin any actions without your knowledge or merely because they have had no contact and presume you are not interested in keeping the property.

Hello Deez,

I am not sure what you are asking.  People who are ill and even terminally ill still have the right to apply for a reverse mortgage. 

If they are not of sound mind, they can still get a reverse mortgage using an acceptable Power of Attorney that was executed prior to the time at which they lost capacity. 

If all else fails, a court ordered conservatorship may be obtained under certain circumstances allowing the senior homeowner to still obtain the loan in some instances to remain in their property.  I really cannot answer your question based solely on the information here.

Hi Tina,

I cannot give you legal advice, but I can tell you there are ways to still close a reverse mortgage if a borrower is incompetent.  A Power of Attorney (POA) can be used if it was executed before the incapacitation and the person acting as POA feels the loan is in the borrower’s best interest (after all, the reason the borrower gave POA to this individual is because she trusted their judgement to do the right thing on her behalf).  

Also, every borrower must attend and pass a counseling session from a HUD approved counselor.  If mom lacked capacity and there was no POA who did this on her behalf but still received the certificate indicating she received her counseling, that might imply that there may have been fraud involved by another party to also deceive the HUD - approved counselor.  

In that case the question would be was the lender deficient by allowing the loan or was the lender defrauded?  If you feel your mom’s loan was originated in a manner that is not consistent with lending laws, I advise you to seek the counsel of an attorney.

Hello Desiree,

I am sorry, I really cannot be of any help in a case such as this.  Your issue is not with the loan, it has to do with heirship rights and the wishes of the owner (your father in law). 

You need to determine if he has anything in writing at this time regarding who is to have control over the estate, Power of Attorney if one is needed, etc. 

If he has already made that election, I would not know how to instruct you to challenge his wishes if it even can be done.  If he has not made any formal prior written instructions such as a will, a Power of Attorney or family trust, then I would tell you that you should contact an attorney to state your case for the reasons you feel you should be awarded this task over his son and see what the attorney has to say. 

I would not know what provisions of the laws of your state would allow for granting the Power of Attorney to one party over another and whether you meet those requirements.  The one piece of advice I will give you is trying to find an attorney who specializes in family law so your money is well spent and you get the answers you need quickly.

HUD states their rules for the use of a Power of Attorney in their manual.  HUD has fairly strict requirements for the use of a Power of Attorney in order to protect the senior homeowners.  Their rules were enacted to prevent property theft by someone’s unauthorized use of a Power of Attorney or a Power of Attorney that was executed when the homeowner no longer maintained legal capacity. 

These are the requirements as taken directly from the HUD manual:

III. POWER OF ATTORNEY/CONSERVATORSHIP GUIDELINES

        A.   Mortgage Loan Application

             1.  Borrowers with legal competency:

                 a.  All borrowers must sign mortgage loan application.

                 b.  Mortgage loan application may not be executed by power

                     of attorney.

             2.  Borrowers lacking legal competency:

                 a.  Incompetent borrower may not sign the mortgage loan

                     application.

                 b.  Court-appointed conservator or guardian may execute

                     any necessary documents, including the mortgage loan

                     application.  The lender must provide evidence that

                     the conservator or guardian has authority to obligate

                     the borrower.

                 c.  An "agent" or "attorney in fact" holding a durable

                     power of attorney specifically designed to survive

                     incapacity and avoid the need for court proceedings,

                     may execute any necessary documents, including the

                     mortgage loan application.

                     (1)  To be valid, a durable power of attorney must be

                          prepared when the "principal" is competent to

                          understand the nature and significance of the

                          instrument.

                     (2)  The durable power of attorney must comply with

                          state laws regarding signatures, notarization,

                          witnesses, and recordation.

_____________________________________________________________________

                                                                 3

        B.   Closing Documents

             Power of attorney (durable or otherwise) may be used for

closing documents.  Any power of attorney must comply with State law and

allow for the Note to be legally enforced in that jurisdiction.

Hello Jen,

I don’t know all your ages but let me explain a few holes in your cousin’s “plan” that would require outright fraud to complete from what you are telling me.  Consider the following:

If the loan is in the name of the older brothers (your father and your uncle), they have to live in the property for it to be eligible.  If your cousin says they do when they don’t, that is occupancy fraud and if you also agreed to the terms, you could also be prosecuted for mortgage fraud.

If the brothers deed their interest in the home to you and your cousin, at least one of you would have to occupy the property as your primary residence and the occupant would have to be eligible under the terms of the loan (62 or over, etc.).

You cannot do the loan on half the house – all owners would have to attend counseling and sign the documents for the loan.  Your cousin represents the brother who does not live in the property (or even on the correct coast) and therefore, he would be considered an ineligible, non-borrowing co-owner of the home anyway. 

This means that he (your uncle) really would not be considered for the loan in any event because he has not and does not occupy the property.  As an owner, he would still be required to attend counseling and sign off on the loan documents acknowledging the terms, but he could not be part of the loan. 

The bottom line is that no reverse mortgage may be taken on any house without the consent of all owners.  But in this case, the loan would be a fraudulent effort because neither of the owners occupy the property and any involvement you had in the loan would put you at just as much liability. 

I would never agree to such a deal and I would just be honest with your cousin.  Your dad doesn’t want it, it’s not a valid reverse mortgage unless the borrowers live in the property and you are not willing to commit fraud to complete it. 

Where you go from there is up to the two families and if your dad is still able to discuss it, maybe you start with him.  Possibly you could work out a deal where you buy your cousin (your uncle) out of his interest in the property?  If you show him what it would cost to sell the home and what each family would net, would he allow you to buy it at half of that amount and not half of current market value since that’s all he would get if you have to sell anyway? 

Otherwise, it might be time to sell the home and split between the two brothers/estates.  It’s worth a try if you and dad can agree but I certainly would not agree to participate in any fraud to place a loan on the property.

Hello Michelle,

You have two different issues.  The first is that the loan cannot be “taken over”.  Once the borrower is no longer living in the home, the loan becomes due and payable and there is no provision allowing anyone else to assume the loan. 

The second issue is that the title to the property is not the lenders to assign and the heirs need to resolve this as soon as possible.  The title must pass from the deceased mom to the ultimate new title holder and that will probably now take a court order via a probate. 

Your friend’s sister’s Power of Attorney (POA) may or may not be one that will survive the passing of the mom but that is usually something that cannot be used to transfer the title after the passing of the owner anyway.  The court reviews all claim against the estate and title before issuing title to the remaining heirs and it can take a little while so they should begin this process without delay. 

The loan will be due and payable and unless the family takes the steps required to change the title, they won’t be able to sell the property or refinance the loan and eventually, the lender will begin a foreclosure if no action is being taken to repay the obligation.

Hello Irene,

HUD has some very specific requirements that must be met in order to place a reverse mortgage on a property with the use of a Power of Attorney.  If the requirements are met and the trust allows for the loan utilizing the POA, etc., there are no restrictions about using a family member to originate the loan. 

The notary laws do prohibit notaries from performing self-serving acts so if your sister has her signature notarized by her daughter who would be a beneficiary on the trust, that would not be a legal notary but presumably they would use a signing service to avoid this issue.

For example, HUD does not allow the use of the POA unless your mom is incapacitated in some way.  Most trusts and POA’s are very explicit about when the POA can be used and under what circumstances.  If your sister is using the POA just because she has it and mom is of sound mind, that is not allowed pursuant to HUD rules and if her daughter is a licensed originator who originates HUD reverse mortgages, she should absolutely know this. 

If mom is not of sound mind though, your sister may just be acting in her capacity of Power of Attorney and to care for mom but even then, the POA must be written so that it allows for the financing and your mom’s circumstances.  Many do not.  If you have other concerns though, you may want to contact an attorney to have them advise you. 

Even if your sister has a POA which is completely valid, she probably has a duty to the trust and if you suspect that your sister is in some way taking advantage of your mother, you can discuss this with the attorney to see what remedy you may have.  Only a licensed attorney in the state where mom is located can tell you for sure what the laws are concerning all of these matters and give you legal advice.

I do not know if you have discussed this in depth with your sister or what makes you feel that the circumstances warrant concern but if you haven’t talked to her, I would encourage that you do so.  If you are still concerned, talk to an attorney with a copy of the trust handy and find out where you stand.

Hello Dana,

It has no bearing on your ability to purchase your own home.  You have only agreed to assist your father in law in his transaction, you have not agreed to take on any debt in the process and therefore, it does not affect your ability to qualify for your own loan.

Hi Freddie,

This is a question for an attorney, not a lender.  This is pertaining to the duties and obligations of one individual who acts on behalf of another and I honestly cannot advise you in this area.  I do wish your mom the best.

Good Afternoon,

This is a question for a real estate attorney as it deals with the legal abilities of the power of attorney (POA), not a reverse mortgage.  It all depends on the POA and how it was prepared.  Some grant power under different circumstances, some are limited and some are general with no limitations.  Your POA may require your father to be declared incapacitated and it may allow you to step in at this time – but it might also limit what you can and cannot do.  You really need to have your particular document reviewed to determine under what circumstances you can act and what acts have been granted to you under the document.

HUD has some very specific requirements for the use of a Power of Attorney (POA) which you can find in the HUD manual.  Their requirements will differ based on whether the borrower has or lacks legal competency.  HUD does not have a specific requirement that the lender or the closing attorney meet the borrower however, the closing agent and the lender are absolutely responsible to determine that they have a valid transaction. 

For example, if a POA is being used because the borrower lacks competency, there are letters required from the borrowers’ physician etc. that often require a current evaluation from that physician.  And although I said that HUD did not have a requirement that the closing agent or the lender meet the borrower, HUD does also state that “The durable power of attorney must comply with state laws regarding signatures, notarization, witnesses and recordation”.

There is a very real possibility that in your state, the laws require the closing agent to meet your mom for the final step, even if HUD does not specifically require it in order for it to be valid.  If so, this would be a legal requirement of your state and on that I could not comment.  If you are concerned that you may not be getting accurate information, you may want to contact another closing attorney to request a second opinion.

But one thing you need to remember is that there may be something or a series of circumstances that has alerted the lender or closing agent or both to the possibility of an issue.  If they have any reason to believe that mom is not living in the property or has passed, it is their duty to verify the information. 

Hello Pam,

There is no provision for disability in the program, all borrowers must be at least 62 years of age to be eligible for a reverse mortgage.  If the title to the property is solely in your mom’s name, she must occupy the home as her primary residence in order for her to get the reverse mortgage and even then, when mom passed, the loan would become due and payable so I don’t know if that is the best option for you if you wanted to stay in the home beyond that time. 

If you are also 62 years of age and also on title (not just the power of attorney), then you certainly can get a reverse mortgage on the home with both of you (there are additional steps you need to take as the Power of Attorney) because you would be occupying the home as your primary residence and would meet the program parameters.

Hello Al,

I am sorry to hear all this.  The first thing you should do is secure the home.  I am sure mom has other items in the home as well and it would probably not be very expensive to have someone go to the home and secure it to limit your liability and to protect any other belongings that mom has still in the home.  The next thing I would suggest but is entirely up to you would be to determine if mom has any equity in the property.  I would tell you to contact a senior real estate professional in mom’s area and determine a most likely sales price and compare that to the amount owed on the home.  You can compare that value to mom’s most recent reverse mortgage statement and if there is equity in the property, then I would proceed to work with the real estate professional to sell the home.  All this can be done by phone and usually in a day or two at most.

The reason I say a senior real estate specialist is because they often also work with estates and many can help conduct an estate sale for you after you determine what personal or other items you want from mom’s home, if any.  I have worked with senior real estate professionals who set up the sales and then donate anything that doesn’t sell by the last day of the sale, have the house cleared of all remaining items and debris (if any) and then sold the home without the family even having to be in the area.  If there is still equity in the home, you might as well receive the benefit of it as you may need it for mom.

If this is not the case, or there is no equity left, then you can contact the lender and let them know that mom is no longer in the property and you do not wish to keep the home.  They will begin taking steps to accelerate the Note but you need to remember that until the lender takes the home back, mom or her estate may still liable if anyone is injured on the property, etc. and that’s why securing the home is pretty important.  If you have a neighbor’s information or other friend of your mom’s in the area that you can call, they may be willing to help you by acting as a local contact for a handyman or other entity to just make sure the property is secure by installing locks/doors, etc.  Then the lender could proceed and you could take whatever time allotted to remove any remaining effects of mom’s that you want to keep.  If you do find that there is equity and are going to sell the home, the real estate professional would probably be able to order the service to secure the home for you.  In any case, I wish you the best.

Hello Leticia,

In a case such as this, your father can go to court and have himself appointed as her conservator which can be used for reverse mortgage purposes.  If they seek out free legal aid or assistance, they may be able to do the entire transaction with minimal costs but it does take longer.  Be sure that dad knows the conservatorship must specifically state that he has the right to sign for her in order to place the reverse mortgage on the home and so he should inform the judge of this when the conservatorship is granted so that it can be included in the language.

Hi Chrissy,

The reverse mortgage rules have safeguards in place so that mom’s equity through the reverse mortgage is not easily accessed by others.  If you used the Power of Attorney (POA) to close the loan and the lender has this information, then there should be no issues whatsoever.  However, if mom closed the loan on her own and you wish to now introduce the POA to request funds, there are rules and procedures that you must follow so that the lender and HUD are sure they give adequate protections to mom’s mortgage and thus her equity.  This would mirror the approval requirements that would have had to be met when the loan was closed if a POA was being used at that time and it includes Doctor’s letters, etc.

However, mom can still request an advance if she is just convalescing from a fall at this time and retains mental capacity.  She would make the same request as usual.  If however you need to take the steps to have the POA approved for possible future use, you should possibly consider contacting them now anyway and beginning the process while mom does not require a POA but it is a convenience.

Hi Donald,

You should speak with an attorney to be sure you fully understand the full effect of any Power of Attorney (POA) you sign to anyone.  There are different types of POA’s and some give different authority than others.  A POA allows one party to act on behalf of another subject to the terms outlined in the POA.  This might be for financial reasons, it could be health related and it could just be for cases when you are not in the area and an action needs to be taken in your absence.

A POA does not transfer ownership in a property nor does it bind the recipient to make any payments on a property.  Granting a POA is a very serious decision and you should discuss this with your attorney and any trusted family members/financial advisors to determine that a POA is right for you and under what circumstances.  A POA can be a very useful document but remember that it has to be granted while the Grantor still retains capacity to do so.  In other words, you can’t wait until after something happens in many instances or the POA may not be valid.  Many families do not make considerations for wills, POA’s and other instructions until after it is too late and it makes it harder on loved ones. 

Hi Lynda,

We have written an entire article about when and how a Power of Attorney can be used and you can access that article here. The loan is in the homeowner’s name (your mom) with your brothers signing as her POA.  The only liability is the property and you all as the heirs must decide at the end of the loan what you want to do with the property, sell it, pay off the loan and keep it or just walk away and let the lender take it but there is never any personal liability and no other recourse.

Hello Annette,

I have to tell you firstly that we are not licensed to give legal advice and even at that, I don’t know the location of the property and every state has their own laws regarding foreclosure so unfortunately, I can’t begin to tell you what was done, how it should be done or the notice requirements.  I can tell you that I think you may have missed your window to protect your rights though, especially if a foreclosure has already been completed.  At this point in time, I would strongly suggest that you immediately contact legal representation in the area where the property is located to determine that all of your rights have been protected but let me tell you what I fear.

If you did not answer all (or any) of the notices that you received after the borrower passed, the lender would assume that the borrower’s heirs were not interested in retaining the home or making arrangements to pay off the loan and would begin foreclosure proceedings (you said you began to receive all kinds of notices but you don’t mention anything about contacting them to make arrangement to pay off the loan).  In fact, you mentioned that you received notice of a court date and did not attend.  That appearance was your opportunity to plead your case to the court to avoid foreclosure, obtain additional time or become fully notified of the coming actions.  When you say you received no notice, I fear the court date may have been your opportunity to obtain notice and you forfeited that opportunity by choosing to not show up.

With regard to foreclosure proceedings and handling of personal property left in the home, every state and possibly even county has their own laws and requirements for how this has to be handled.  Again, I strongly suggest you seek legal counsel and if you feel you cannot afford an attorney, then I would suggest you check with free legal aid options in your area, to make sure that the lender did not violate any of your rights.  You may have missed your window and it may be too late to do anything now, but you won’t know that unless you check with the proper source and the sooner the better.

Hi Jackie,

I’m not sure I understand the question fully based on the way it is asked.  Does your mom reside with you in your home or in hers?   If you are both living in your mom’s home, your mom can get a reverse mortgage if she is over 62 and as long as you follow the HUD rules for their use, you can use a power of attorney for the transaction.  There are different requirements depending on whether mom is incapacitated and competent or is incompetent.  You must remember though that the reverse mortgage is only valid for as long as mom is still living in the home and so if this is the home you both live in, you need to make plans for what you will do when the loan becomes due and payable when mom no longer lives there if you still plan to make that your home after that event occurs.

Hello Miles,

The reverse mortgage is just a loan/lien against the home and does not help or hinder your right to sell the home or retain the proceeds.  If your mom granted you documents that would allow it without a reverse mortgage, you can do it with one.  You would just sell the home the same as with any other loan and pay off the loan with the proceeds.

Hi Joe,

Firstly, I am not an attorney and I would suggest you contact legal representation to get a solid answer if you are concerned about legal rights. Especially since I don't think I understand your question. I can't tell if you are saying that your mom got a reverse mortgage on her own home after she implemented a trust and a power of attorney meant to protect your sister or if she was named as the POA of your sister (her daughter), was named in your sister's trust and obtained your sister's property as a result of her passing. 

If it was your mom's property, I don't know why any of the rest of the situation would matter, mom doesn't need any of your approvals to do a reverse mortgage on her own home.  If you are concerned that she obtained the property by way of fraud, then an attorney would have to advise you there.  I honestly have no idea if the courts would allow you to invalidate a lien that was placed in good faith or if they would require you to seek recourse from your mom if it was determined that you should have gotten something from your sister that your mom denied you from getting due to an action she took that she should not have taken.  

Hi Donna,

No funds are available to heirs or anyone else once the last borrower permanently leaves the home.  Your brothers cannot request funds from the reverse mortgage after your mom passes.

Hi Louann,

My advice is that your family has a quick meeting of the minds to decide what you want to do before making that notification.  I can't tell you whose responsibility it is to notify the lender that your aunt is no longer living in the property, but I can tell you that when they do make this discovery, there will be a decision to make and if you are prepared before the bank begins to put time limits on you, you will be ahead of the game. 

For example, the family will need to decide if they are going to keep the home of sell it.  Either way, you should contact a local realtor and find out the current value of the home.  If the balance of the reverse mortgage is lower than the current value, then you can sell the home and keep the equity or refinance the loan with a new loan in one or more of the heir's name(s).  If the balance is higher than the current value, you can choose to pay off the current loan at the balance owing on the current mortgage or 95% of the current market value, whichever is less (the lender and HUD will have to agree on the value but that will be determined by appraisal).  If you do not wish to try to sell the home because the balance owed is higher than the current value and no one wants to keep it, then you also have the option to walk away from the house with no recourse to any of the heirs or your aunt's other assets.

But you really should know what your plans are before you contact the lender because you may need to remove your aunt's personal belongings from the home, you may need to begin a loan application for the heir that wishes to keep the property or you may need to just have the knowledge to know what's best for you and your family.  Once you know what you want to do, someone needs to contact the lender and let them know of the circumstances so that you can make a plan of action that may include a payoff of the loan through a sale or refinance or possibly a deed in lieu of foreclosure with you deeding the property back to the lender in order to relieve yourself of the hassle.  In any event, there is no responsibility that the lender can assign to any particular family member to say that they should have notified the bank and anyone in the family can notify the lender.

Hello Donna, 

The answer to your question depends on a couple of things, the reason for the Power of Attorney (POA) and the lender who will be funding the loan (HUD has basic guidelines but lenders can and often do interpret the guidelines a bit differently from lender to lender or add some additional documentation requirements of their own).  But you have two different reasons for borrowers using a power of attorney.  One is incompetency and the other is for facilitation. 

HUD and lenders do allow a POA to be used if a borrower is incompetent however, there are very specific guidelines that must be met.  Firstly, the POA must be a durable POA that was written with the specific intent to survive any incapacity.  It must have been drawn up and signed by the borrower when they still had the legal capacity to understand the instrument and therefore, lenders and HUD will require the borrower's doctor to provide a letter stating the date of the onset of their incapacitation and the POA must be dated prior to this date.  This is important to remember as often we receive a POA with a recent date only to discover that the date of the onset of the incapacitation was much earlier, making the POA unusable.  The Attorney in Fact will then attend the HUD-Mandated Counseling and can sign the Counseling Certificate. 
The person holding the POA would also sign the application and all closing documents.

The other reason for using a POA is facilitation of the transaction when the borrower(s) still maintain legal competency.  This is a bit more tricky as HUD does allow for it providing the actual borrower signed the Loan Application but then many lenders will differ on what they will or will not allow from there.  4-6 of the HUD 4235.1 Manual for HECM loans does not specify to lenders whether or not any other documents must be signed by the competent borrower or whether the POA may or may not sign them.  This leaves a lot of discretion, and risk, to the lender if they are not prudent with the decision they make to allow or not allow a POA to sign for the borrower.  Therefore, lenders will look at each loan request and make a determination when the borrower is not incapacitated and determine whether or not the circumstances warrant the additional risk.  They may require the borrower to sign a minimum number of the documents on their own, they may not allow the POA but they will base their decision on the individual case.  One word of caution though, most lenders are not very quick to accept a POA for a borrower who is not incapacitated unless there are well-documented circumstances that they feel warrant the use. Read more on Power of Attorney & Trust Matters here or call us Toll Free 800-565-1722

-Mike Branson