Legal Question in Real Estate Law in Illinois
Refinancing and title company & power of attorney
Are there laws for how quickly a title company must pay off an existing mortgage when refinancing? The title company is charging me 6 days of interest plus a $100.00 buffer over the amount of the payoff statement (valid until November 26th). They will not put into writing that the funds would be sent on the 24th of November via overnight mail. Also, they made me sign a 4 month limited Power Of Attorney allowing either the title company or the bank of the new mortgage to make corrections to the closing papers without my prior knowledge or approval. When I tried to rescind the power of attorney today, I was told that if I want the loan to go through, then I had to grant this power of attorney. Is this legal?
3 Answers from Attorneys
Re: Refinancing and title company & power of attorney
The money aspect of your transaction is rather standard. They take "extra" money to be sure that they have enough to pay off your prior first mortgage. With regard to the POA issue, some mortgage companies have you sign a POA to make "technical" corrections. This has always been a problem for me conceptually in my practice, but it is legal; whether you want to go along with their "program" is another matter. This is another iteration of the "Golden Rule"...he who has the gold makes the rules.
Re: Refinancing and title company & power of attorney
Sounds pretty typical to me. The title company is not "charging" you the interest and buffer (I hope. If they are that's a whole 'nother matter.) What I would imagine they are doing is sending too much money to your previous lender to ensure they don't have to have you come back with a ten dollar check because the payoff didn't get there until after the cutoff time. I wouldn't expect them to put anything in writing that they will send out your payoff on any given date. What if your new lender didn't get the money to the title company by that date? What if there was another massive power outage, snowstorm, airline shutdown? There is just too much beyond their control to make such a promise to you.
As far as the POA, it's legal since you signed it. It is essentially something your lender requires in order to give you a loan. You don't have to sign it, but they don't have to loan you money either. Heck, they could have a document which requires you to wash the closing agent's car every week. Hmm, not a bad idea....
Re: Refinancing and title company & power of attorney
Some title companies may do such things, however, I do not know that reputable companies go so far as six days. As for the buffer, never heard of such. However, it's all legal if you agree to it. As far as the POA, your lender may do this for corrections. You can ensure that it only applies to such corrections and NOTHING ELSE.
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