Q: "Seeking advice on loan modification: If my mom (or we as POAs) signs, who is liable if the loan defaults?"
my brother took the loan using my mom’s credit. My mom is not in the mental state to sign the agreement. If myself or my son who are the power of attorneys signed that document for my mom, where does the responsibility lie if the loan goes into default.?
A:
If you or your son sign the loan modification document as power of attorneys for your mom, you are signing on her behalf, not assuming personal liability for the loan. Under California law, the responsibility for the loan remains with your mom, as the original borrower, even if you sign on her behalf using the power of attorney. The lender can only seek repayment from the borrower, which in this case is your mom.
However, it's important to be aware that if the loan goes into default, the lender may pursue foreclosure on the property. This could have significant consequences for your mom’s estate and any assets tied to the property. As power of attorneys, you should ensure that signing the loan modification is in your mom’s best interest and that you understand the potential financial implications.
It may be beneficial to consult with a legal advisor to fully understand your responsibilities and the best course of action for your mom’s situation. Ensure all actions taken are in alignment with your mom's best interests and within the scope of the power of attorney.
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