Not sure why you need to select into params. Just select the columns and then promote the schema attributes if you need to use those values.
SELECT Loan.LoanID,
Mortage.LoanAmt
FROM Loan
JOIN MortgageTerms on Mortage.MortageType = Loan.MortageType
WHERE Loan.LoanNumber = @Loan_Num FOR XML AUTO, XMLDATA
Or if you need those names…
SELECT Loan.LoanID as [LnndCaseNum],
Mortage.LoanAmt AS [LnAmount ]
FROM Loan
JOIN MortgageTerms on Mortage.MortageType = Loan.MortageType
WHERE Loan.LoanNumber = @Loan_Num FOR XML AUTO, XMLDATA
No need to put them to vairables unless you explain why you wanted that.