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Notary Bulletin

New Lender Rules Underscore Need For Best Practices

Notaries who have failed to follow best practices, or who have “slipped” on paying attention to detail, have inadvertently launched a small, but growing trend of mortgage lenders implementing their own requirements and rules for the Signing Agents they hire.

A small number of lenders have implemented their policies to protect themselves because dangerous practices on the part of some Notaries have cost them significant sums of money and put their transactions at risk. Some of the rules place a greater burden on Notaries and, if the trend continues, Signing Agents could be awash in new rules and regulations for each individual company, and for each assignment they perform.

One lender, for example, now requires Signing Agents to complete a “Notary Identification Verification Form” for every loan signing assignment. The requirement is the direct result of fraud cases in which a Notary’s seal was used on a loan package by someone other than the Notary. Notaries are supposed to keep their seals in a safe and secure location so they can not be used for fraudulent purposes.

Another company now requires all Signing Agents it hires in Missouri to possess title insurance producer’s licenses. They also must produce a photocopy of their driver’s license and a secondary form of ID before being hired for an assignment. These requirements stem from the losses the company incurred after a couple of Signing Agents inadvertently signed the HUD-1 Settlement Statement under the line that read “Settlement Agent.”

Settlement Agents typically are licensed representatives or employees of title companies who finalize the loan closing. They perform duties that fall outside the purview of NSAs — such as preparing the abstraction of the title and recording the title documents. NSAs are not “Settlement Agents,” and they do not have the authority to sign a document as the Settlement Agent.

While this trend represents a hefty, additional burden on Signing Agents, both cases stand as examples of how mortgage companies might react when the Notaries fail to follow professional standards of care. You should never let anyone borrow your seal, and always call your employer if there is any question about how to proceed.

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