Why would a state that consistently ranks among the top three in the nation for mortgage fraud ignore a strong recommendation — from a committee of its own Senate — to adopt a simple requirement that has proven to be effective in preventing and prosecuting mortgage fraud?
This question has observers inside and outside the state of Florida scratching their heads in confusion, and disappointment.
After years of attempts by various public officials to codify recordkeeping requirements for the state’s 440,000 Notaries — the largest population of Notaries in any U.S. jurisdiction — the legislature failed to implement one of the most vital functions a Notary can provide, even after a Senate “Sunset Review” Committee strongly recommended that the state employ recordkeeping and thumbprint requirements.
The irony is that Florida’s Notaries — and its citizens — could benefit most from a recordkeeping requirement. With a population exceeding 18 million and one of the hottest real estate markets in the country, the state consistently ranks among the top three for reported cases of mortgage fraud, as reported annually by the FBI. And law enforcement has to forge ahead with their fraud investigations without a key piece of evidence: a Notary’s record indicating who appeared before them to acknowledge their signatures on loan documents.
“The Sunset Review Committee’s report was an indictment of Florida’s epidemic problem of real estate fraud, and it offered a viable solution in the form of a journal and thumbprint requirement for Notaries,” said NNA Vice President William A. Anderson. “We’re somewhat surprised that the Legislature has chosen to disregard that recommendation.”
A “Sunset Review” — which occurs every two years by state law — is mandated by the Florida Government Accountability Act and is intended to determine if a public need exists for the continuation of a state agency, its advisory committees or its programs. It also gives the Legislature a chance to make sure the state’s departments and agencies are fulfilling their intended purpose in the most efficient manner.
While examining the state’s Notary Public oversight, management and statutes, the committee relied heavily upon a 2003 National Notary Association report, to issue a strong recommendation that journal and thumbprint requirements be made law to aid in law enforcement investigations and reduce forgery.
But this year, as the Sunset Review’s recommendations began to work their way into legislation, the Committee’s strongest recommendation for Notaries — the requirement of recordkeeping and thumbprints — was markedly absent from two key bills introduced in both the House of Representatives and the Senate. It was reported to the NNA that the requirements were removed because it might put a significant cost burden upon the state’s businesses, and that it “just wasn’t the right time.”
However, whatever business costs might be incurred by a recordkeeping requirement could potentially be eclipsed dramatically by losses due to fraud. David Fleck, former head of the Los Angeles County District Attorney’s real estate fraud unit, said a Notary’s journal is extremely valuable evidence to both help prosecute fraud suspects, and help victims and businesses recover their assets.
“States that don’t require journals are really missing the boat on this issue. Why would you require notarized documents to prevent fraud, but hamstring investigative efforts when the fraud occurs? It just doesn’t make sense,” Fleck said. “A well kept Notary journal record often provides the first investigative lead we use to catch the crook. Even just recording basic information about the transaction helps the investigator catch the bad guys.”
While both pieces of legislation include commendable requirements to maintain — or even increase — educational requirements, they could have been much stronger with a recordkeeping and thumbprint requirement. Codifying these long-established best practices would demonstrate Florida’s commitment to ensuring that Notaries are equipped to serve their vital function as gatekeepers against document and identity fraud, and it signals to its citizens that their important transactions will be protected properly, and with care, so that their assets are not easily plundered.