Why must the lender receive the original power of attorney?

The requirement for the lender to receive the original power of attorney stems primarily from the need to protect against fraudulent transactions. A power of attorney grants an individual the authority to act on behalf of another person in legal or financial matters. If this document is not original, it could potentially lead to situations where someone misrepresents themselves or their authority, leading to unauthorized transactions. By ensuring that they have the original power of attorney, lenders safeguard themselves against the risk of fraud, as this document requires adherence to specific formalities that are difficult to replicate.

While confirming the borrower's identity is important and might be facilitated by the original document, the primary safeguard against fraud emphasizes the necessity of having the original. Ensuring compliance with local government requirements and maintaining accurate records for future loans are also vital aspects of the lending process, but they are secondary to the immediate need for fraud prevention during the loan signing. Thus, the core reason is to mitigate the risk of fraudulent activities in transactions involving significant financial commitments.