Real Estate Home Mortgages/HELOC fraud


Dear Mr. Forster,

I own a home in Los Angeles that I rent out to my mother and aunt while I work overseas.

Last year my aunt received a letter from the bank regarding a Home Equity Loan of Credit for $120,000 that was taken out in 2004 supposedly by me, and the bank requested I notarize documents again that were misplaced. It was then I discovered that my mother was the one who took out the loan claiming she had Power of Attorney from me -- a POA that I gave to her a few years before. I have no recollection of ever giving her a POA nor did I give her permission to take out a loan; however, if she did have it, I felt I was legally bound by the POA to honor the home equity loan. Therefore, I went to the US embassy to notarize this document and sent it to the bank.

Last week my aunt happened to find the Power of Attorney that my mother had. When she scanned it to me, I saw that the signature was not mine. I was overseas on the day the POA was signed. The POA was clearly signed by my mother since it matches her handwriting. I don't know how she managed to get a notary public seal though, but she did.

Now that I know the loan was taken out by a fake POA, am I still liable for the loan (even though I went to get bank documents notarized at the US embassy last year)?

Your opinion and advice would be greatly appreciated. Thank you.


The time to inquire about the HELOC was last year, before you notarized the documents in which you confirmed to the bank that you, indeed, were liable for the loan. By now the barn door is open, and the horses are gone.

You should discuss the situation with your mother, and see if it is possible to retrieve all or part of the money that was stolen. Before I tell you what your other options are, you need to understand that all of them are quite detrimental to your mother, and because of that, it is imperative that you discuss them with a qualified real estate attorney before you pursue them. Those options are:

1. File a criminal case with the Los Angeles District Attorney or the US Attorney.

2. File a civil lawsuit against your mother in the Los Angeles County Superior Court.

3. File a 3-Day Notice of Loan Cancellation with the lender.

Best wishes,

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This topic answers questions related to purchasing a home, owning a home, home ownership, mortgage education, mortgage applications, and mortgage needs whether buying a first home or refinancing a current loan. Issues related to home ownership, home equity, mortgage education, refinacing options, home improvment finacing, first time home loans, home equity loans, vactation home loans, and mortgages for investment homes are dealt with here also. Though not the primary focus of this topic, Home Equity Lines of Credits (HELOCS), reverse mortgages, and calculating home equity may also be asked. If you do not see your home mortgae, home finacing, or home equity question answered in this area then please ask a question here

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Eric Forster


Did your last mortgage broker or lender trick you into a messy situation which could cost you your home? I've been close to 30 years in the mortgage industry, and I've seen it all. Believe me, it is not pretty. As the owner of a mortgage company I am called frequently to testify as an expert witness in mortgage fraud cases and other cases where lenders did not fully disclose the terms of the loans they were offering to the borrowers. I have seen fraud being committed by borrowers - and by lenders. It's a tough world out there. And by the way - you are invited to visit my website,


More than 25 years in loan production and underwriting in Southern California.

Mortgage Bankers of America (Southern California Chapter)

Former columnist for AOL Financial Center and the author of a mortgage primer.

MBA (Finance)

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