Think your power of attorney paperwork is airtight? A Virginia court just made lenders responsible for mistakes – find out what this means for your business
A Virginia appeals court just ruled that lenders can’t rely on incomplete powers of attorney when securing mortgages – risk falls squarely on the lender.
The case, decided September 30, 2025, by the Court of Appeals of Virginia, started with a couple, Juan Carlos Aranibar Chinchilla and Rossemary Jeanneth Arnez Villarroel. They lived in Bolivia but owned several investment properties in Fairfax County, Virginia. Their brother-in-law, Carlos Camacho, was allowed to live at 6011 Old Rolling Road to keep it maintained for their visits. In 2016, the couple signed powers of attorney before a notary, giving Camacho authority to lease, rent, and manage their properties.
At some point after, Camacho created a fraudulent “Special Power of Attorney” for 6011 Old Rolling Road. He wrote a new first page granting himself extra powers, including the ability to borrow and refinance the property, and then attached a notarized signature page from a legitimate power of attorney for a different property. With this altered document, Camacho took out a loan in excess of $700,000 in 2018, secured by a deed of trust on 6011 Old Rolling Road. The fraudulent power of attorney was attached to the deed of trust and recorded in the land records.
In 2020, Camacho sought to refinance the loan with Robert K. Harwood, L.C. Lloyd Martin, PLC acted as Harwood’s attorney, and Potomac West Title, a Martin subsidiary, handled the settlement. Martin found the 2018 deed of trust and the attached power of attorney during a title examination. Harwood asked Martin to review the power of attorney, and Martin determined it appeared properly notarized. Camacho also signed an agent’s certification before a notary, affirming the document’s validity. Harwood then issued a $750,000 loan to Camacho, secured by a new deed of trust on the property, with Martin as trustee.
The landowners only discovered the fraud in November 2021, when Camacho emailed them an apology. Camacho had set up a bank account in the landowners’ LLC name to receive loan proceeds and make payments, which he continued until March 2022. Camacho later pleaded guilty to felony forgery and embezzlement and died on the day of his sentencing.
After Camacho stopped making payments, Harwood issued a notice of default and scheduled a foreclosure sale. The landowners, through their counsel, reinstated the loan by voluntarily paying about $19,000 and agreeing to continue interest payments to avoid foreclosure. They remained current until July 2023, when another default notice was sent. The landowners then filed suit against Harwood and Martin, seeking a declaratory judgment that the loan was void and to quiet title, as well as reimbursement for payments made on the loan.
The circuit court found that the power of attorney relied on by Harwood was fraudulent and contained a “forged signature” under Virginia law. The court held that under the Virginia Uniform Power of Attorney Act, Harwood and Martin were not entitled to rely on the fraudulent power of attorney, voided the deed of trust and promissory notes, and ordered Harwood to reimburse the landowners for payments made since May 2022.
Harwood and Martin appealed, arguing that the power of attorney contained genuine signatures, was properly notarized, and that they were entitled to rely on it under the statute. They also challenged the reimbursement order, asserting that the landowners’ payments were voluntary.
The Court of Appeals of Virginia affirmed in part and reversed in part. The court agreed the deed of trust and promissory notes were void, but for a different reason: the power of attorney was not “acknowledged” as required by statute because the document itself – not just the signature page – must be verified before a notary public. The court emphasized that statutory protections for third parties under the Virginia Uniform Power of Attorney Act only apply when the power of attorney is properly acknowledged, and that attaching a notarized signature page from another document does not meet this requirement.
The court reversed the order requiring Harwood to reimburse the landowners for voluntary payments. It found that the landowners had other legal remedies available and chose to make payments to avoid foreclosure, making those payments voluntary and not subject to reimbursement.
For mortgage professionals, the takeaway is clear: every power of attorney relied on in a transaction must be fully and properly acknowledged, not just notarized in part. The risk of fraud falls on the party accepting the power of attorney if these requirements aren’t met. This case is a reminder that careful document review is essential in mortgage lending, and shortcuts can have serious consequences.
