Reverse Mortgage Lenders Increase Scrutiny for Agents

Reverse mortgage lenders now routinely second-guess power of attorney (POA) documents. In addition to the POA, they require a doctor’s letter stating that the principal was competent at the time they executed the POA or indicating when the principal’s incompetency began. This is not a HUD requirement, but it is becoming a common lender requirement.

Some people argue that this practice discriminates against incapacitated adults by imposing obstacles that are not imposed on competent adults. On the other hand, lenders think that it is a necessary method of protecting themselves. Lenders face heightened exposure with reverse mortgages because agents can get large sums of money all at once without having to repay it, leaving the lender on the hook.

For those who feel they have experienced this discrimination, file a “lending discrimination complaint” at the Housing Discrimination Complaint Website.

See Reverse Mortgage Industry Taking a Hard Line on POAs, ElderLawAnswers, July 6, 2010.