One of the most serious decisions homeowners facing foreclosure may be asked to make is to sign over the deed to their home. Transferring ownership of the property diminishes their ability to keep control over the house, and may just reward a scammer with an easy target. Just as serious and potentially dangerous, though, is the decision to sign over a power of attorney to a third party to represent the homeowners.

Homeowners in financial hardships who are being sued for foreclosure need to be cautious when anyone says they can help them if the owners just sign over a power of attorney to the third party. Oftentimes, this will be in the context of selling the property to a Realtor or investor through a short sale. The question the homeowners should ask is what the third party will do to "take care" of the foreclosure lawsuit and other matters, and if they can help the owners do these tasks on their own without giving them the power to represent them as attorney in regards to the foreclosed house.

Anyone requesting the power of attorney to take care of the legal issues surrounding the foreclosure may be especially suspect. The summons is simply a legal document that the court sends foreclosure victims to inform them that they are being sued. The bank is suing for foreclosure of the house, and the people responsible for paying the mortgage are being "summoned" to court to make an answer to the lawsuit. Either the homeowners or their attorney can file an answer with the court or request more time to sell the home.

For this reason, it may be a better idea to hire an actual real estate attorney or contract attorney to help in dealing with the courts and the Realtor or investor who wants the short sale. That way, the homeowners will know who they are hiring and that the attorney is competent to deal with the legal process of the foreclosure. Just giving any third party power over the home is usually not a good idea, and is something that will be taken advantage of.

In fact, the vast majority short sales set up by real estate agents or private investors do not involve the owners signing a power of attorney. A power of attorney would be used if the owners were disabled or otherwise unable to get to court to represent themselves and they wanted someone else to represent them just in that one instance of the foreclosure lawsuit. These types of limited powers of attorney are more common between family members or trusted friends, rather than third parties trying to put together a deal in their own best interests.

Unless there are a lot of other protections for the owners in the deal, it might not be a good idea at all to sign over power over the house. Maybe if they can revoke any decisions made by the representative, they will be able to retain enough power to rescind any bad decisions made by the limited attorney. However, even in this case, it is more likely the third party who will benefit the most from having near-complete control over the fate of the house.

Thus, it would probably be best if the foreclosure victims found a Realtor or investor who guided them in what to do about the summons on their own, and was just there to facilitate the short sale or other deal to stop foreclosure. Realtors already represent the homeowners if they are listing the house for sale or attempting to locate buyers -- owners do not need to give them even more power to represent them in court, as well.

One very real danger is that they will use the power of attorney to sign over the deed to the house into their names. Then the owners will have no way of defending themselves in court on their own because of the power of attorney, and will not even have control of the property anymore because ownership was transferred into someone else's name. Homeowners need to be careful of what powers they are signing away and how they will be used.

Giving away any power during the foreclosure process is a decision that homeowners can not make lightly. Simple promises from a third party of "help to save the home" and assurances to "trust me" are just plays upon the emotions of desperate homeowners and should be viewed with extreme skepticism. Foreclosure is a situation when homeowners should try to keep as much control over their property as they possibly can, and signing a power of attorney can have just as destructive consequences as signing over the deed to the house.

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