Limitations on use of power of attorney.
1. A mortgage broker or mortgage agent shall not engage in any act or transaction on behalf of a private investor pursuant to a power of attorney unless:
(a) The power of attorney is executed for the sole purpose of providing services for not more than one specific loan in which the private investor owns a beneficial interest; and
(b) The provisions of the power of attorney:
(1) Have been approved by the Commissioner;
(2) Expressly prohibit the mortgage broker and his mortgage agents from engaging in any act or transaction that subordinates the priority of a recorded deed of trust unless, before such an act or transaction, the mortgage broker obtains written approval for the subordination from the private investor;
(3) Expressly prohibit the mortgage broker and his mortgage agents from using or releasing any money in which the private investor owns a beneficial interest with regard to the specific loan for a purpose that is not directly related to providing services for the loan unless, before any such money is used or released for another purpose, the mortgage broker obtains written approval from the private investor to use or release the money for the other purpose; and
(4) Expressly provide that the power of attorney is effective only for the term of the specific loan unless the mortgage broker obtains written approval from the private investor to extend the term of the power of attorney to provide services for not more than one other loan and the written approval:
(I) Identifies the loan for which the power of attorney was executed; and
(II) Identifies the loan for which the written approval is being given.
2. A mortgage broker or mortgage agent shall not act as the attorney-in-fact or the agent of a private investor with respect to the giving of written approval pursuant to paragraph (b) of subsection 1. A private investor and a mortgage broker or mortgage agent may not agree to alter or waive the provisions of this section by contract or other agreement. Any such contract or agreement is void and must not be given effect to the extent that it violates the provisions of this section.
3. Except as otherwise provided in subsection 4, a power of attorney which designates a mortgage broker or mortgage agent as the attorney-in-fact or the agent of a private investor and which violates the provisions of this section is void and must not be given effect with regard to any act or transaction that occurs on or after October 1, 1999, whether or not the power of attorney is or has been executed by the private investor before, on or after October 1, 1999.
4. The provisions of subsection 3 do not apply to a power of attorney that designates a mortgage broker or mortgage agent as the attorney-in-fact or the agent of a private investor if the power of attorney:
(a) Was executed before July 1, 2001; and
(b) Complied with the provisions of this section that were in effect on October 1, 1999.
5. The provisions of this section do not limit the right of a private investor to include provisions in a power of attorney that are more restrictive than the provisions set forth in subsection 1.
Last modified: February 27, 2006