My son-in-law is mentally disabled and his mom who had POA forced him to co-sign a loan, loan was not paid. Who is responsible for loan?

Has he always been disabled/special needs? The reason I ask is because she might be his legal guardian or conservator -- and not his PoA -- and if so then SHE is responsible for the loan if he has never had cognitive capacity. I know parents with special needs adult children and they are the legal guardians, not PoA (since the principal would have needed to have cognitive capacity at some point in order to assign a PoA).

SIL is responsible until someone can prove that SIL was not competent to sign that contract. Prove that POA was aware he was incompetent and coerced him to sign it, that then is fraud. At that point the POA has overstepped their responsibilities because they personally profited. Meaning that, the POA would use SILs money to pay off the loan that was really Moms, the POA.

The POA should be revoked. But then if SIL is incompetent, he cannot assign a new POA. He will then need a guardian and thats expensive. Yes, a lawyer is needed here.

Technically they both are responsible, but I would call the sheriff and have a deputy come out and run it by them whether it’s theft or abuse etc.

If he is still considered legally competent - the POA would likely not be invoked, and he could sign of his own accord.

If the POA is invoked - then he in all likelihood would not be considered legally able to sign any kind of contractual documentation.

If he felt any kind of coercion, but he is still competent, I'm not sure where that lands him.

But in any event, this is a legal matter now.

This sounds like a breach of Fiduciary duty and abuse.

I would report this to APS, Police, Sheriff's Office or DA for investigation of abuse. As to the loan? In my opinion, he shouldn't pay it. Will his credit be ruined? Probably. But it is perhaps best he doesn't HAVE credit as he is unable to be financially responsible.
This is at present a legal matter, I think. They may refer you to an attorney. Call Local Agency on Aging in your area for guidance to low cost/free legal advice if needed.