Using a Power of Attorney to Close a Home Equity Loan

The Texas Supreme Court has clarified that lenders may use a Power of Attorney to close a Home Equity loan provided the POA was signed at the office of the lender, an attorney-at-law or a title company. Finance Commission of Texas v. Norwood (2013)

QUESTION:  How does a lender verify that the POA was executed at the proper location (either at the lender’s office, an attorney’s office or a title company)?

ANSWER:  Follow guidelines set out by the Finance Commission of Texas and Texas Credit Union Commission:

 “Any power of attorney allowing an attorney-in-fact to execute closing documents on behalf of the owner or the owner’s spouse must be signed by the owner or the owner’s spouse at an office of the lender, an attorney at law, or a title company.   

A lender may rely on an established system of verifiable procedures to evidence compliance with this paragraph.  For example, this system may include on or more of the following: 

  • a written statement in the power of attorney acknowledging the date and place at which the power of attorney was executed; 
  • an affidavit or written certification of a person who was present when the power of attorney was executed, acknowledging the date and place at which the power of attorney was executed; or 
  • a certificate of acknowledgement signed by a notary public under Chapter 121, Civil Practice and Remedies Code, acknowledging the date and place at which the power of attorney was executed.”  (7 Texas Administrative Code 153.15) 

If a member/applicant intends to use a POA to close a Home Equity loan, lenders should carefully evaluate the document to verify that it complies with the law and regulatory guidelines. 

If you have any questions or would like us to review a POA, please give us a call.

 

Sincerely,

 

Morton Baird, Michael Baird, Karen Miller and Kim Selsor

Posted in Real Estate Law