ask george & chuck
July 21, 2008

Power of attorney, refinancing mortgage loans
Answers to real estate questions as appearing
in the Houston Chronicle

Dear George: Can I purchase a home for my mom using a general power of attorney?

Answer: No. A general power of attorney is most likely not adequate to purchase a home for your mom. A title company will recognize a "durable" power of attorney as set out in the Probate Code, and it need not be a "specific" power of attorney.

We consulted an escrow officer at a title company for further clarification: "A durable power of attorney survives the disability of the principal, meaning that if the person who signs it loses physical or mental capacity, the power of attorney can still be relied upon. A general power of attorney gives broad and sweeping powers to the attorney-in-fact. It is not acceptable to the title company in most cases. A specific power of attorney is typically a short-term-use document which gives limited power to the attorney-in-fact. Title companies require a Texas durable power of attorney, which combines the durable and the specific. A power of attorney does not survive the death of the principal. It can also be revoked by the principal. Therefore, the party relying upon the power of attorney should always get a verbal or written re-ratification before relying upon it."

Dear George: I own a rental home. I want to get cash out to pay off some credit-card debt and want to refinance my loan. My first choice in lender won't do a cash out for a propety not occupied by the owner. What is the best way for me to find a lender willing to do this transaction? My income is strong, and my credit is impeccable.

Answer: We asked a senior loan officer to answer this question: "Find a reputable mortgage broker to do the searching. While the wholesale lending market is shrinking in terms of the number of lenders participating and the programs offered, mortgage brokers and their sponsored loan officers have access to dozens of banks' and lenders' programs that a consumer does not directly have. The flip side of that coin is that local retail banks have the ability to make loans using more flexible criteria, since they typically service the loans they make, and local banks normally do not accept applications from third-party originators like mortgage brokers. If you're determined to use a local bank, there is no shortcut to picking up the telephone and asking each bank. When you call, be ready to provide the value of the property, the balance owed on the current loan, your credit score, your income, and your monthly debt total. This information will assist the bank's loan officer in determining whether the process can move forward or not.”