Posted by HisHughness on 7/27/13 12:10am
Msg #478201

Comments, please

Would some of the more experienced signing agents give me their views on this, please?

The quote below is from a 3-page POA for a Texas home equity loan. It was part of the loan package from a large and quite respected title company -- 4+ stars in NotRot. This is only part of the POA, though it may be the most onerous. I have not seen a correction agreement that granted such sweeping powers to the TC/Lender. Have I just not been paying attention? These are some of the powers granted under the POA:

***The true and lawful Agent for the Principal, and in Principal’s name to complete, execute, place our initials on and sign the Principal’s names on “Closing Documents” related to the above referenced Loan Transaction, and to execute, by the initialization and signature, as required by the authorized Attorney in Fact, for the purpose of completing the Closing Documents in the above referenced Loan Transaction:

Closing Documents include but are not limited to Notes, Deeds, Mortgages/Deeds of Trust, Subordinations, security instruments, riders, attachments, title company internal documents, addenda, including documents necessary or requested by XXX, Lender or other parties to the Loan Transaction, including but not limited to governmental and taxing authorities. In addition, in the event of clerical errors or mistakes, including but not limited to omissions, spelling, grammatical, typographical and scrivener errors, then in such events, the Principal hereby gives its consent and grants authority to the Agent to correct any omission, misstatement or inaccuracy and execute any new or corrected or completed documents as may be deemed necessary to ready [remedy] any omission, inaccuracy or misstatement.***

Reply by JanetK_CA on 7/27/13 12:32am
Msg #478203

Wow! That first paragraph you showed is a doozy! I wouldn't want to sign that if I was the borrower...

I'll have to look at those more carefully. With a form like that, with such broad authority being granted, I think I'd suggest they read it before signing it. I'd also be very interested in YOUR thoughts on that.

Reply by Darlin_AL on 7/27/13 5:21pm
Msg #478260

Today, I read one for JP Morgan Chase that stated the POA extended to future owners of the property! That is, the correction (or whatever) could be made at any point in the future for a future owner? I am hoping I missed the wording that shows I have the wrong interpretation.

Reply by Clem/CA on 7/27/13 12:44am
Msg #478205

created to cover notaries that can't read POA instructions....

Reply by rolomia on 7/27/13 4:55am
Msg #478209

Forgetting that the language of said document is a series of poorly-constructed run-on sentences haphazardly linked together in an obviously-vain attempt to confound the reader, such nonsense will continue until affected borrowers hold elected leaders accountable for allowing lawyers/attorneys to write such ambiguous contracts that clearly demonstrate ulterior motives benefiting lenders to the clear detriment of borrowers interest.

However, the less-than-savvy majority of borrowers whose limited understanding of contractual language allows such grievous misdeeds to remain unpunished will, no doubt, continue to support said elected officials because voters prefer to remain oblivious to this problem when awareness requires acknowledged blame for their (borrowers) participation through inaction.

And, elected officials would never allow lenders to publicly acknowledge said legislator's connivance in this almost-criminal activity, lest said lenders reveal evidence proving improper conduct, back-room deals, secret payouts, PAC/lobbyist access, etc. Otherwise, government would grind to a halt because most of the true power-brokers would be in prison, assuming such kindness was extended to them.

Fortunately for them, most of their constituents aren't savvy enough to realize this. If they did, the alternative would seem preferable to the actual response. In other words, you get what you will tolerate. And, they know this. JMHO

Reply by Paul2_FL on 7/27/13 7:09am
Msg #478214

Hugh,

In all the years I've been doing this I've only had 2 borrowers question this type of POA and not sign it.
Since we are not attorneys and cannot give them advice all we can do is present the document, tell them briefly what it is, and let he/she/they decide on signing or not.

I'm glad you brought it up though because it's been bugging me for a long time and would like to ask those who work, or had worked, in Title/Lender companies whether or not they actually did exercise their right under a POA such as this to add a borrowers' name or initials to a document.

Reply by desktopfull on 7/27/13 4:07pm
Msg #478253

Do you remember Stern? His foreclosure mill that was cranking out fraudulent docs for filing foreclosures in Florida? This new POA is a CYA for when they misplace or lose the original documents and you will notice that it is good for the length of the loan, it is not "limited" or self expiring after 90 or 120 days as they used to be done.

I've had 3 borrower's refuse to sign when they read that POA so far, a call to the lender and walla they sent a new POA with a 90 day limitation. All the borrower had to do was complain and it went away. I've found that most borrower's don't read or even give a decent look at the docs presented to them to sign, they just care about the new lower payment that they will be getting. Nor do they care about the $6 to $26 thousand in new closing costs that they are adding to their principle balance.

Reply by Lee/AR on 7/27/13 7:41am
Msg #478216

Yep. Pretty close to many I've seen. Rolomia makes good points on this. What generally cracks me up is that if one of these issues is committed/overlooked at the signing, they are much more likely to send the notary back out to fix it than use the POA to correct it.

Reply by Les_CO on 7/27/13 8:58am
Msg #478218

Sounds great to me….we can now have a one page “loan document” just get this signed and title will do the rest.

Reply by Yoli/CA on 7/27/13 9:44am
Msg #478220

My thoughts were similar to Les.

Hugh, is this the only doc being signed? Having signed this POA, why would other docs be required?

Reply by Joe/NC on 7/27/13 10:27am
Msg #478225

If you are giving them the power of attorney, could they then turn around and change the rate and then sign as poa, sounds like this gives the title co carte blanche to do as they please.

Joe/NC

Reply by 101livescan on 7/27/13 10:36am
Msg #478226

The Power of Attorney you show here is awfully broad. I did a POA signing just yesterday, and it was very specific that wife was only signing for this transaction as husband's attorney in fact in his absence.

This is a scary document. I wouldn't sign it. But then the client's loan will likely not fund if he refuses.

Reply by HisHughness on 7/27/13 12:10pm
Msg #478234

All of us are familiar with the one-paragraph correction agreement, which safeguards against changing the rate, amount of payments, principal, etc. This was a <3-page> stand-alone POA that included those limitations. However, there are many things not included in the exclusions: Place of payment, recipient of payments, nature (check, cash, MO) of payments, etc. This gave carte blanche to make such changes -- not corrections, but changes. I have not previously seen anything anywhere close to that expansive.

Reply by 101livescan on 7/27/13 12:17pm
Msg #478235

I would not sign this POA as it is written. Way too much leverage for the TC, and not in favor of the client.

Reply by Rani Sampson on 7/27/13 1:11pm
Msg #478237

A person could sign it and then add an addendum revoking all permission granted under the POA. Or, the borrower could revoke authority of the agent to make any substantive changes.

A POA only empowers the agent to do what the principal (the borrower) authorizes. I might sign the title company's document to keep them happy, but then I'd immediately write a limitation or revocation of those powers.

Reply by Les_CO on 7/27/13 8:22pm
Msg #478277

And then what would you do with this “addendum“ or “revocation”??

Reply by BrendaTx on 7/28/13 9:58am
Msg #478306

Les, I was thinking a little bit like Rani. The POA, if used, has to be recorded before the mortgage. The revocation could be recorded after the mortgage. ***But, I would not do any of this without an attorney!***

That's why borrowers should have lawyers review documents before signing, in my opinion. But, they seldom do. In all my years of working for attorneys that did this kind of work, I saw relatively few come through the doors to get reviews of mortgage documents.

Reply by Les_CO on 7/28/13 12:37pm
Msg #478319

Agreed, many should have legal representation. However it’s most likely some Title Company/Lender lawyer drafted the POA in question so when it comes to lawyers…caveat emptor. If this ‘revocation’ were to be attached to the documents…it would nullify the POA and probably be deal breaker (if not ‘lost’). If recorded before the recording of the documents/POA, since it would reference something not publically in existence it may cloud the title and if discovered would most likely kill the deal. If recorded after the other documents it would revoke the powers granted from that point forward. But not before someone at Title if they chose, changed the terms of the note, the DOT, and any other documents they wanted to change, or if they simply quit claimed the property to their boyfriend. In other words a totally useless exercise. Better to read before you sign (much to the chagrin of most NSA’s) and if you don’t like the terms, or wording, or trust the people you are dealing with don’t do it. There are many hundreds of loan/mortgage companies out there, just go with someone else. Better to spend a little more time getting the loan/terms you want, than to lose your largest asset. But as a NSA, my only duty would to be to ask the borrower if they read and understood the document they were signing. JMO

Reply by BrendaTx on 7/28/13 12:39pm
Msg #478320

Yep...we are saying the same thing. n/m

Reply by ReneeK_MI on 7/28/13 4:27pm
Msg #478330

Brenda/Les - re: recording the POA

I can imagine the difference in state-by-state requirements, but my understanding is that the POA would not need to be recorded until/unless its use becomes necessary. If I'm wrong, I'm more than happy to be educated on that point.

Reply by Les_CO on 7/28/13 5:14pm
Msg #478337

Re: Brenda/Les - re: recording the POA

I don’t know the laws in every state, but would think that an unrecorded POA regarding a specific property would not affect the title. If there was some dispute, the original unrecorded document could be presented to the court, and the decision made there. The point being that IF it is recorded, and someone other than you without your knowledge uses that power to effect a change in the title to your property you could be in a real mess. A revocation of such power after the fact wouldn’t help much.

Reply by BrendaTx on 7/28/13 5:53pm
Msg #478339

Re: Brenda/Les - re: recording the POA

It is a common practice by many attorneys in Texas. I cannot say that it is a law.

Reply by BrendaTx on 7/28/13 6:01pm
Msg #478342

Renee' typical Master Closing Instructions/TX Heloc

An excerpt from a typical set of instructions (Texas).


Lender requires prior notification of all powers of attorney to be used in the transaction. The
Department of Veterans Affairs must approve any powers of attorney to be used in a
VA-guaranteed transaction. If the use of a power of attorney is requested prior to documents
being prepared, certified copies of the power of attorney for the Borrower must be reviewed and approved by the Lender. ****Original powers of attorney must be recorded in the same county(ies) as the security instrument is recorded, and returned to the Lender. In addition, if a durable power of attorney providing for third party indemnification is used, the power of attorney must also be recorded in the county in which the principal resides.***** The returned original(s) will be kept by the Lender. After closing, certified copies of all powers of attorney should be sent along with the rest of the loan package to the Lender.

Unless Lender authorizes in writing otherwise, any Power of Attorney used by a Borrower must meet the following requirements:
BORROWER(S) POWER-OF-ATTORNEY (POA)
A Power-of-Attorney (POA) is a written instrument authorizing an individual to act on a
person’s or entity’s behalf as his/her/its agent or Attorney-in-Fact (AIF). The following rules
apply when reviewing Borrower(s) POA document/signatures (also see attached sample POA):
1. POA must be signed by the Borrower(s) and name must match Borrower(s)
name on Note;
2. POA must state the name of the designated AIF;
3. The designated AIF must be the same person signing the Note on behalf of the
Borrower(s);
4. The effective date of the POA must be the day of or before the date of the Note
(cannot be dated after Note date); and
5. POA must be property notarized.
The signature of an Attorney-in-Fact (AIF) is acceptable as long as “Attorney-in-Fact” (AIF) or
“Power-of-Attorney” (POA) is indicated beside the AIF’s printed or signed name and an
acceptable matching POA document is received.

Reply by ReneeK_MI on 7/29/13 5:03am
Msg #478356

Instructions are specific to Borrower's use of POA

Topic here was Lender's Ltd POA. Most (if not all) states DO require POAs that affect real property to be recorded, but Lender's are not recorded with the mortgage. That doesn't mean they couldn't be - they could be at any point in the future, if/when the Lender wanted to use their power as an AIF and assuming the law would consider their use as affecting real property. Recordation doesn't validate the document, it merely makes it a part of public record. The date of expiration on the POA and/or the automatic expiration per any state law would be separate from any date of recording. As 'just' a lay-person, I imagine there might be wiggle room here, also - if this Lender's POA were used to initial/sign a corrected document, or even a duplicate of a lost document, does that in itself have any direct effect on the property?

The only reason I brought this up was because of the comments made regarding these Lender's POAs needing to be recorded with the mortgage.

Reply by desktopfull on 7/27/13 3:55pm
Msg #478252

Yes, this has become common in the packages I get, on top of the fact that they aren't limited now, but effective for the full length of the loan. Basically, the lender is giving themselves the right to alter, add or adjust anything they want at any time they want.

I view it as sort of a CYA for when they lose and need to recreate original documents for filing future foreclosures.

Reply by ikando on 7/27/13 4:48pm
Msg #478256

So what can an NSA do/say to give the borrower a head's up? Is this something the public should be made aware of that is not necessarily to their benefit, especially as it relates to the full term of the loan? Would it be invalid if the principal were to limit to a number of days?

Reply by desktopfull on 7/27/13 4:58pm
Msg #478257

All you can do is ask them to read it, if they have questions call the lender or TC, nothing else, as a Notary Public we are not allowed to advise.

To my knowledge the borrower doesn't have the authority to alter or change any document without approval from lender or TC.

Reply by rolomia on 7/27/13 6:37pm
Msg #478269

All great replies. Thanks! Unfortunately...

...the loan will only fund if this document is signed, as is.

If unauthorized changes are made by BO, the loan won't fund and a resign will be required (at no additional fee by orig. NSA).

I was told by the last SS who hired me to make certain the BO knew that unauthorized changes on any docs. would be grounds for termination of loan agreement and that, I, the NSA, wouldn't be paid if BO didn't follow directions.

In other words, the trend of lenders/TC/SS holding NSA's accountable for BO's mistakes is here to stay.

One lender rep. I spoke to told me that it was in my interest that such a document was in the package because it guaranteed said lenders success at collecting payment on the loan, which would insure my own continued relationship with said lender.

I wish I hadn't left my boots at home, after hearing that. ROFLMAO

Reply by JanetK_CA on 7/27/13 7:22pm
Msg #478273

Re: All great replies. Thanks! Unfortunately...

It sounds to me like a wide open opportunity to commit fraud - particularly if it's a lender doc. The only ones I've seen where I didn't notice the usual restrictions were from title companies. I don't like the trend of the notary being accountable for everyone else's mistakes, either. Puts us in a very difficult position, to say the least.

Reply by ReneeK_MI on 7/28/13 6:23am
Msg #478303

I believe you are correct re: foreclosures

I have not worked 'inside' since '05, so this might be dated - but when I was in wholesale lending, we sold to all the major investors on the secondary market, and IF an initial or signature were to be placed by Lender or title via the Ltd POA authority would NOT have been marketable. In no instance ever have I seen this POA used UP TO the point of sale (retail, wholesale & title - on loans being sold or held).

However, it would seem to be an obvious remedy that might be used w/in the courts for foreclosures, but that would only work if the POA were dated to the maturity date of the security instrument. Pure speculation and no personal experience, but as long as the POA is compliant and applicable, I don't know why it would not be used in legal proceedings.

I tried to find some cases relative to this, and couldn't - but I did find some interesting things about Replevin Action. I know zip about foreclosures, but if I understand this (and I don't know if I do), "Replevin Action" would allow the lender to take possession of the security property prior to the final foreclosure. Given the backlog of the courts and the length of time it can take to finalize a foreclosure, this 'enhanced' version of the POA that Hugh described might help 'secure' the security during that lengthy interim?? Of course, it also would seem to be a viable solution to lost, original Notes and missing Assignments.

In every place I worked, actually using the POA was not even an option, even though trying to obtain a borrower's signature on a document post-closing is common, AND often frustrating - borrowers are not as helpful or compliant as we might imagine. My personal experience with this 'phenomenon' makes me cringe when I hear NSA's complain about being sent back for a missed signature with "why don't they just send it directly to the borrower?" Answer is: it'll rarely get signed/returned, definitely not timely if it is.

I recall one horrid instance of authorizing funding and receiving the signed pkg (after-the-fact), and it was missing the Note. No Note. Even when faced with eating that loan amount (can't prove a negative, could not prove title failed to return it so no hope for a claim), the use of the POA was NOT an option as it would be unmarketable. It took me a couple weeks to get a signed Note out of the borrower - SOP was to enforce the Compliance Agreement. Anyway - I realize that's all anecdotal, but my own experience is all I have to offer.

Reply by 101livescan on 7/27/13 8:44pm
Msg #478278

Hugh, I think this document is a deal breaker. I would not sign this document if it were included in my package.

Given that, I would think the LO would think twice before using this TC in future transactions.

I had a loan signing where the borrower told his loan officer, I will not close this transaction with your company unless you use (my specific escrow officer).

It worked. Who is more motivated in any transaction? The LO and his boss.

Reply by JeffC/CA on 7/27/13 10:23pm
Msg #478282

I just made my wife (Realtor) aware of this. She will start warning her clients to be on the lookout for these POA's. This goes way too far. I think I'll feel some sort of guilt letting someone sign something like that. Of course, it's not my place to give warnings.

I wish I could get my hands on the entire document. I would like to bring this to the attention of Fed. authorities, i.e. HUD, FHA, Fed Reserve, Congress, US Attorney Gen. With all of the disclosures, RESPA, Reg. Z, etc. how can they let borrowers sign something like this? Maybe it's not fraud, but it doesn't seem to be in the consumer's best interest. Also, it makes committing fraud, easy.

What LEGITIMATE reason could someone have for using this? Lender/TC generate docs, borrowers sign docs, Lender/TC double check docs, record, fund, file, done. Any small problems can be fixed with the methods already in place. Any docs needing to be redrawn and signed should be done immediately. I'm ranting! Sorry.

Reply by desktopfull on 7/27/13 11:44pm
Msg #478290

"What LEGITIMATE reason could someone have for using this?"

In the future, if they lose the original documents necessary to file a foreclosure they can recreate them using this type of POA. Many states require original docs to be filed in a foreclosure to prove standing.

Reply by jnew on 7/27/13 11:51pm
Msg #478291

I have a customer who has a POA with similar language. One of the parts I disliked the most was the part which listed the documents which could be changed and in the same statement said that the POA was not limited to them. Why not just say all documents? There appears to be no limitation. I have had signers who have refused to sign the POA. After calling the TC, the TC said that they will not guarantee that the loan will disburse immediately if there are errors which have to be corrected by the borrowers and that the borrowers would have to make up the daily interest on the loan payoff. So, I limit my spiel on the POA to "The settlement agent requires this document to be signed by you." I won't complete the closing without a verbal ok from title, if refused. I make a point of not pushing the affidavit on them. I feel the less said the better.

Reply by JanetK_CA on 7/28/13 12:59am
Msg #478297

This reminds me of the buzz that was going around a few years back about electronic signing, where supposedly borrowers would just sign a POA and have the settlement agent sign everything else for them. Funny how that never really caught on...

Reply by BrendaTx on 7/28/13 9:48am
Msg #478304

This sounds like a correction agreement combined with a POA. I think it is a bit zealous in wording, but it seems focused on the transaction at hand. To answer your question, I don't remember seeing one like this before. But, the above does not show many anything that worries me.

(Note: My opinion is that foreclosure is not an issue. My understanding is that it is impossible to give a POA for a foreclosure in a HELOC. It may be referenced in the H.E. Affidavit Loan Agreement that the borrower has not signed a document that gives a POA for the purpose of judicial proceedings.)

Reply by BrendaTx on 7/28/13 9:54am
Msg #478305

Note - Notaries are very suspicious of agreements like this because we went through the meltdown. It is true that Robosigners and bankers pushed paper through on foreclosures, so we have seen a lot in our time to worry us.

However, a lot of the correction agreement types of things would not be necessary if everyone was sitting in a lawyer's office, lender's lobby, or title company to sign documents. To a degree, they facilitate NSA field work. Re-draws are avoided at the table. However, part of the compliance agreement usually states that borrowers must re-sign corrected documents as requested.

Reply by JanelWI on 7/28/13 1:42pm
Msg #478324

Is this indefinitely? Usually, these come with a time frame involved 60-90-120 days....I guess what is missing for me here is the fact that they make no mention that they intend notify the borrower with updated copies should these types of corrections arise.

Most of the clerical or scrivener errors I see come from lender and title themselves getting it wrong and rarely because a borrower had given a mis-spelling on an address, county, or name etc.... I just had one on last Friday where they had this woman's deceased husband's name as the primary on the 4506T and no where else in the package, except the payoff letter and payoff statement. No one saw this? Not title or lender? Really? For that purpose, to clarify, correct, and update the borrowers with the corrections in my opinion is just good housekeeping. However, this wording makes no reference to that at all. This is the kind of wording that renders pharmaceutical sleep aid...useless.

This does not say anything about protecting the borrowers interest now or into the future, it just references what "they" may deem necessary to correct. Frankly as a consumer who signed up for a lender having me over a barrel for 10,15,20,25 or 30 years....I would want to be in on the "needed" correction.

As a consumer, there is no doubt I would want to know if my signature/initials or information on my loan documents have been altered, corrected, or my signature has been re-applied to a document, or applied to a document that has been missed, or incorrectly drawn up in the first place, regardless of signing a POA/correction agreement. It protects the lender/title and protects the consumer. So, in this wording...they are just looking out for the sake of the transaction itself.

So, it is up to the consumer to actually read and discern if this is something they want to sign up for or not. This wording makes no reference to either notifying the borrower of the correction or providing updated documentation of the corrected info. I certainly don't want to find out about it the next time I refinance, or find out it was an error that is preventing me from refinancing.

This is the type of form that would make me pause and say, "Just because I can sign it, and I want this loan, should I?". Many won't do that. They hope for the best and work to try to do those four precious rules that keep every lender off their backs, which is: make their payments, maintain the property, pay their taxes and insurance. It is not like the lender calls them up everyday to ask, "Hey, how's your day going?". We basically do those four things and we really never hear from them unless we stop jumping through those four basic little hoops.

Or, until we try to refinance and find out we did not really read or understand our loan terms, or find out we don't have a government owned loan and can't take advantage of these low rates...or the correction on the loan documents that now shows my signature is not correct after all.......my point is....we should not get lulled to sleep by convenience or complacency. It is important to discern and practice the art of questioning situations, and hone our skills of independent thinking. It makes for checks and balances in a predictably flawed and "human" society. Some would say this impedes progress. I say, it is just good business.

This form is one signature and then what? No news is good news? Not necessarily.

Reply by Bear900/CA on 7/28/13 6:42pm
Msg #478345

A Rat in the Ratings Agencies and Wall Street?

This POA goes beyond the timeframe required by an escrow holder and most lenders.

Many loans are pooled and sold. These require AAA ratings to make them sellable. HELOCs by nature are risky. Ten year HELOCs sold prior to the meltdown collecting interest only will go into full amortization in the next couple of years with some drastic results.

"However, Moody's says that the key to reducing any potential losses is proactive management of the HELOC portfolio, while continued improvement in the housing market and stronger employment rates would ease the pressure on borrowers even with the looming payments spike." Proactive management: smack of POA's?

http://www.moodys.com/research/Moodys-Rising-HELOC-payments-credit-negative-for-US-banks-but--PR_276466

Canada's biggest rating agency, DBRS, (our version of Moody or Fitch) gives an in-depth study of securitized HELOCs. DBRS also rates the US economy so their methodology on rating HELOCs makes for a well-prepared study or at the very least a good case of the shakes and sweats. Keep in mind "originators and sellers" mentioned are those involved with SIV's.

http://www.dbrs.com/research/244990/rating-canadian-home-equity-lines-of-credit-helocs.pdf

Huge loan servicers like Nationstar with a history of no concern for customers would love to have such a POA in their portfolios as would sellers of SIV's if they could get away with it.

Then again I might be wrong and Wall Street is full of nothing but nice guys.