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January 27, 2015

The Mortgage & The Note

Filed under: (4) Documents,Ken Edelstein — Tags: , , — admin @ 11:41 am

The Mortgage and The Note
These two documents formulate the essence of the home purchase or refinance. The vast number of related documents provide essential and legal information. However, the Note and the Mortgage are really the “action” documents. In their most basic functionality: the note specifies the terms of the loan, the mortgage provides collateral against a default of the Note.

Curiously, the Note typically begins with “In return for a loan that I have received, I promise to pay $XXX,XXX.XX”, but rarely is the Note notarized. It is often initialed on each page by the borrower(s) that are signing the final page. There should be an agreement with the 1003, the Loan Application as to who is technically a borrower. Non-obligors who may be “on title” never sign the note. As the definitive definition of the loan; interest rate and payment terms are generally the second and third items on the first page. These are the items of greatest interest.

Also essential, but rarely initially reviewed, is the Right to Prepay; and what will happen if the borrower fails to pay according to the terms of the Note. Typically, if more than one person signs the Note, each bears the full responsibility for payment. The Note is a negotiable instrument, similar to cash or a bond. They are frequently sold by the initial lender.

Almost all variations of the note include the words “Sign Original Only” on the signature page. As a negotiable instrument is being created, multiple copies of the Note for the same obligation could lead to fraud, confusion, and the borrower(s) being asked to pay each Note! When asked to execute multiple copies of the same Note; shrewd borrowers are careful to add wording to the effect that the duplicate(s) are “file copy” and “not negotiable” next to their signature(s).

The Mortgage, often referred to as the Deed Of Trust, is generally of much greater length compared to the Note. A key provision of the Note grants the Mortgage enforceability. The Note references the related Mortgage: “In addition to the protections given to the Note Holder under this Note, a Mortgage, Deed of Trust … dated the same date as this Note … protects the Note Holder if I do not keep the promises made in this Note”.

Think of the Mortgage as the “enforcement arm” of the Note. The Mortgage contains, in about fifteen pages; the procedures to, typically; take back the property. For notaries the Mortgage often contains a “built in” problem. On the first page of the Mortgage the borrower is “supposed” to be named. However, in lieu of their legal name the “vesting” name often appears. This is not a problem on the first page. But, it does get to be a problem on the last page. For it is there that the computer often uses the “vesting” name in the notary section.

For technical reasons, on the Mortgage vesting often includes “status” terminology such as “husband and wife” or “a single woman” or “a married man” – but **ONLY** the name is permitted in the notary section. Thus, “before me appeared John B Doe a single man” is not permitted per NY State notary laws. I am required to redact (thin line through & my initials) the “a single man” part from the pre-entered value following “before me personally appeared”. Care should also be taken to have John B Doe initial JBD not just JD if his middle initial is on the signature line of the Mortgage. I promise to pay, and, what if I don’t; are the heart of the deal.

Most fail to note (no pun) that there is language in the NOTE that incorporates the Mortgage as “part of the note”

A little mentioned aspect in the “fine print” but O so important.


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Ken’s comprehensive guide to Deeds — Good Deed Bad Deed

The Deed of Trust


January 20, 2015

The Signature Name Affidavit

The Signature Name Affidavit
An extension of the simple signature affidavit (this is my signature), is the signature / name / AKA affidavit. Here it becomes a little bit more complex for both the notary, and the affiant. Understanding what are probably the two most frequent uses for the form helps to jog my memory as to their importance, and how they should be processed.

Both the single name format and the multiple name formats generally use Jurat wording. As, when you think about it; an acknowledgement kinda violates the basic purpose. It would be useless. That routine notary statement “Subscribed and sworn (affirmed) before me…..” is the key. This document contains, under oath, a notary witnessed (after checking ID) signature sample. Experts can compare the “known to be authentic” sample against the signatures on the questionable documents. Both formats, if ever used, will probably see a courtroom. Always use your embosser on these.

The multiple name section has the affiant making an additional statement “I am also known as”. Generally this provides a means of processing slight variations in signatures. For example, they may miss a middle initial on one of their signatures. But only if it’s completed correctly. I am looking at a signature name affidavit that has first middle and last at the top. In the “also known” there is one entry preprinted, that one uses the first and last name. But, what if they sign first, init, last? That very likely situation is not covered by preprinting. However, there are a few blank lines for the astute notary to use. Printing (generally on the left), first, init, last; and having them sign on the right using those name components. Now if they sign first init last; on **ANY** document, that document (per their own sworn statement) has their legal signature. This catch might make the closing go smoothly. And, let us not forget; eliminate the need for a free correction trip!

Now for the hard part. The above paragraph was just a warm-up; prepare for some grief. There are AKA entries that raise the eyebrows of the affiant. Very few of them will object to adding or subtracting variations possible of the middle name; they will sign off on that. However, when there are one or more entries that are vastly different from the legal name there is a problem. The root of the problem will never become known to you. They want “confirmation” of the extreme variation to deal with a situation that might have started as a clerical error. This blog entry makes no attempt to deal with the issue of fraud issues related to AKA entries.

I have had affiants, often in their attorney’s office; hand add the term “have never been known as” to a line item, adding proper initialing. They then proceed to sign the rejected name. It’s their sworn statement, and their lawyer wisely wants their statement completely truthful. It is possible that the processor of the signature name affidavit just glances to see that “the boxes are full”. I don’t know the odds, but the few modified ones I notarized did not bounce back. How could they? The affiant modified the form to reflect the truth, sworn under oath.

You can’t suggest the “never been known”, unless you are an attorney. So, lacking a parachute; the affiant will sometimes refuse to sign. If possible call “upstream”, and let them work it out. When nobody was reachable, I accepted them signing only at the top. It’s a fine line between making something available to sign; and exerting influence to sway their sign, no sign decision.


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The Signature Name Affidavit (2016 version)

Ken’s tips for the Closing Disclosure


January 6, 2015

Notarized Limited Power of Attorney

Filed under: Power of Attorney — Tags: , , — admin @ 4:00 am

If you need a Notarized Limited Power of Attorney, keep in mind that step one is getting your document drafted. That needs to be done under the supervision of an Attorney. Please don’t ask a notary to draft a legal document! Once drafting a Limited Power of Attorney is complete, then it is time to call a notary public.

Any notary public can notarize any type of document other than a vital record. Just call a notary, make sure your government issued photo-ID is ready, and have them notarize your signature on the Power of Attorney. And remember, not to ask the Notary any legal questions as it is illegal for them to give you any legal consultation! They are just the notary!

Good luck getting your Limited Power of Attorney Notarized!

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Notarized Power of Attorney

Index of posts about power of attorney


December 11, 2014

Notarized Warranty Deed

Filed under: (4) Documents — Tags: , , — admin @ 3:22 am

Where to get a Notarized Warranty Deed
Where to get a Notarized Warrantee Deed

I have never been good at spelling, but I was a very prudent notary public in my day. Have your Attorney instruct you on how to draft your Warranty Deed. When the document is complete, call a mobile notary from 123notary to help you notarize this Warranty Deed or find a notary office somewhere in your area that you can visit during business hours. You will need the signer to have current government issued photo-ID.

If you are getting an Acknowledged signature, you can sign the document before you personally appear before the notary public.

Good luck getting your Warranty Deed notarized.

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Index of information about notarized documents


November 18, 2014

HUD-1 The Settlement Statement

Filed under: (4) Documents,Ken Edelstein — Tags: , — admin @ 9:04 pm

“We are waiting for approval of the HUD before we can send you the docs”. I’m sure you have heard that frequently. Arguably the single most informative document in the package. The HUD, along with the Note, Mortgage and TIL (you better know what the letters stand for) comprise the heart of the deal. Although the HUD is usually not notarized, you DO have to take a look at it.

Probably the most important things for you to check are lines 303 and 603 on the first page. But first take a look at items D and E on the top. D & E name the borrower and seller. Generally you will meet either the borrower or the seller; occasionally both. Now you know if you are meeting with the borrower or the seller, and a quick check of 303 and 603 will let you know if there is “Cash (x) From” due. You are expected to notice cash from and to pick up the payment.

Generally the check is made payable to the Settlement Agent. The agent is named in box H at the top of the form. The check(s) are usually made out to the name in box H. On page 2 in the 1100 series of entries there is often a notary fee listed. Sorry, but that is not the amount that you will receive; it’s the amount payable to the Signing Service. If it says $350 and you took the job for $75; you can be sure the Signing Service considers you a hero. As you recall they said they are only getting $125, you might have a slightly different opinion of them.

There is generally a separate signature page. Oddly, the signature page is often not numbered and really has no “tie” to the HUD itself. Take care here; often the signature page requires two signatures. It’s an easy mistake to just obtain the first required signature but not the second. It’s also easy to become a favorite with the settlement company. They need several copies of the HUD and often make them and stamp them with “Certified True Copy” – they are always delighted when the notary prints a few originals, five is a nice quantity; and has original signatures on each.

Sometimes you will receive the entire package minus the HUD; which you are told will follow as soon as it’s approved. Wanna take a chance? If so, go ahead and print the two copies of the docs that you currently have in your inbox. Don’t be too surprised if you are told to shred what you printed. Numbers on the can HUD relate directly to other numbers in the package. If at all possible wait for word that the HUD is “final” prior to printing the package.

As the HUD is the key “money expenses” page; it’s common for the borrower to receive email with “preliminary” numbers. Obsolete HUDs (that are not the “final”) look very similar to the “final” that you brought to the table. Take care that an earlier HUD, printed by the borrower is not mixed in with the documents that you printed. Borrowers will frequently want to compare the one they printed (left hand) to the one you brought (right hand). Be absolutely sure that you return the one sent to you and not the one sent to the borrower.

There is a silver lining to the gray cloud of HUDs. It’s a federal form and almost always the HUD is basically identical and it’s easy to find information. However, I have seen “HUD clones” that do not follow the standardized format. Take care to look closely to determine how these are signed (perhaps also initialed?). Rarely notarized, it’s an easy form to process. Return a few copies of what was sent to you, signed in all the right places.

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November 4, 2014

The Affidavit of Occupancy

An affidavit of occupancy is a simple document (sometimes notarized), that offers the borrower generally three choices. The first option (generally by making initials) is to have the property as a Primary Residence. This option typically requires the borrower to occupy the property, usually within 60 days; for a minimum of one year. The second option is to acquire the property as a second home, while maintaining a primary residence elsewhere. The third major option is to declare the property as Investment Property, not to be occupied by the borrower; but to sell or rent for rental income. It is unlikely that the borrower cannot accurately choose the correct option.

Care should be taken by the borrower to initial the correct choice. The wrong choice can result in financial and even criminal penalties at a later date. If the borrower is buying to live in, there is really no issue. However, when the intent is speculation or rental; it’s accurate disclosure or risk problems. Lower Mortgage Rates are available for owner occupied. This is why the intent to rent or speculate must be disclosed.

Affidavits of occupancy are especially relevant for small-time or independent real estate investors. If a borrower were to select “investment property” then choose to move in permanently – there probably would be no problem. Of course they would be paying a higher mortgage rate, lenders are rarely annoyed by such activity. It is the reverse, claiming to move in; getting a lower mortgage rate, then renting it out that causes problems.

Since affidavits of occupancy are not heavily regulated or governed by formal, industry-wide guidelines, they’re often originated in-house by the mortgage lenders or other real estate professionals. Thus, unlike the standardized HUD, there really is no uniform structure to the Affidavit of Occupancy. Actually it might just as well be called an Occupancy Certification, or similar. The only aspect that seems to appear with regularity is the need for the borrower to specify how they intend to utilize the property. This is generally done by initialing a specific paragraph, but some variations may call for a complete signature.

This form is a redundancy to similar assurances that appear in the Mortgage, namely, how the borrower intends to utilize the property that secures the loan. The occupancy statement contains strong language, 30 years in prison, fine of a million dollars, etc., per Title 18 US code Sec. 1001, and others. They are a separate document that the borrower cannot ignore, often notarized; and help the lender to charge a higher rate for loans that have greater risk. Typically, rental or investment property has greater risk. The difference can be half a percent that will be several thousand dollars or more over the life of the agreement.

They serve as an extra layer of protection against mortgage fraud and provide lenders with a clear chain of evidence that can be used to expose and prosecute such fraud. Whereas a homeowner might be able to make a plausible if unconvincing argument that he or she misunderstood the intent of the “occupancy question” that’s often buried within the structure of a mortgage settlement document, he or she has little chance of avoiding penalties for breaking an affidavit of occupancy. The affiants who “break” these (often) sworn statements risk being charged with mortgage fraud. At the very least the lender can demand full payment of all money due.

In processing this document care should be taken to be sure that all borrowers initial/sign the section that specifies the intended use of the property. Some lenders might require a non-obligor to also sign/initial. It’s probably a safe bet to have any signatory to the document also initial/sign the selection section.

It is the real intent of this document to curb the activities of those who wish to obtain property at a low mortgage rate for speculation or to become “little” landlords. Sometimes it takes years for the housing authorities and the lender to discover the fraud. Those false statements can and do incur harsh civil and criminal penalties. In addition to the mortgage fraud; housing violations are common. The form is simple and easy to understand. There really is nothing for the notary to “explain”. A notarized false statement is exactly that; in addition to being a crime.


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October 16, 2014

The Right to Cancel done Wrong

The Right to Cancel done Wrong
It’s easy to make errors on the Right to Cancel, also known as the Right of Rescission form. Unfortunately this form must be free of errors prior to funding. There are several ways to make a mess of it. This entry will cover a few of the more common errors; I’m sure some creative notaries out there will comment on the aspects that I neglected to mention.

Perhaps the most blatant error is to have to applicant sign in the “I wish to Cancel” area and not on the “I received two copies” area. Sounds silly? But, it does happen. This is a real show stopper as escrow and lending are faced with a cancellation that they cannot ignore! You cannot just line thru to improper signature (redact/initial) and have them sign in the proper place, the page must be replaced and signed *only* in the proper place.

“Three Business Days” that’s the standard. But, like so many things that sound simple it has some not so obvious gotchas. Those three days, when crossing a Saturday, have different meanings to different lenders. Thus, that “right of rescission” calendar that you carry stands a good chance of being wrong. Some count Saturday as one of the three days, some don’t. Of course if it’s filled in, along with the correct signing date; no problem. But to be sure, when a Saturday is involved you have to ask the proper authority for them to supply the end date of the rescission period. Your calendar “might” be wrong!

Each borrower is supposed to receive two *executed* copies of the RTC. They are not executed by merely being in the borrower document set. It is required that you “fish out” these pages and have the borrower(s) sign as received and the proper dates are on the top portion of the forms. You don’t do that? You have done many packages without a problem. Well, if you want to be a perfectionist, leave the borrower(s) executed copies (2). Often there will be only one RTC per borrower – so go the extra mile and be sure to return two executed per borrower with the docs.

Sometimes the signing gets pushed back a day or so. The RTC must be changed to reflect the new signing date and the correct end of the RTC. If there are preprinted entries they get a thin line thru them and the borrower initials the end of the line, not you! Then, the correct dates are entered, neatly please. The same procedure for the borrower copies. Two borrowers? You need to correct and have signed four forms. It’s a good idea to print a few spare forms…..

On rare occasions I have been asked to have the borrower(s) *only* initial the date areas that will need to be changed, with no dates entered. I do not feel comfortable with this. However, if you do this; be sure to do exactly the same process on the borrower(s) copy.

Often the “checklist” will mention the RTC but it will not be included in the package. It’s only relevant when the security for the loan is the borrower’s primary residence. Thus, if the property in question is for investment or a second home; there will be no applicable RTC forms.

Always pay extra close attention to the RTC, it’s a federally mandated form and must be perfect or you will get a request to visit the borrower again. This is the one case where you cannot swap out the borrower copy page to correct a flaw; as that page too must be perfect.

You might also like:

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Index of information about documents


November 28, 2013

Who are all the parties involved in a Power of Attorney?

The Principal (also called the grantor) is the person who needs an agent to act on his/her behalf in dealing with legal, financial, and/or health care issues that ultimately involve signing documents, checks, and so forth.
The grantor grants power to the Attorney in Fact via the Power of Attorney document; the Attorney in Fact (also known as the agent or grantee) may then make decisions and sign on behalf of the grantor.

The Attorney in Fact (also called the agent or grantee) is the person designated in the Power of Attorney to act solely on behalf of the principal, avoiding any conflict of interest or personal considerations. The Attorney in Fact acts as a fiduciary, someone who can take care of money for the principal and whose judgment, advice, and assistance can be relied upon. If the fiduciary is, for example, the guardian of an estate, he or she must file a fiduciary bond with the probate court or judge. The Attorney in Fact may transact purchases and sales and financial affairs, and execute agreements.

An Attorney involved may be a family Attorney who drafted the Power of Attorney or one who represents the principal in other matters; by contrast, the Attorney in Fact is often a family member, and not an Attorney who represents the principal for a fee. All rights granted to the Attorney in Fact are set forth and may be limited at the beginning by the grantor; thus, the necessity of having a good Attorney draw up the Power of Attorney. The Attorney may be involved in creating legal remedies or documents that the Attorney in Fact will execute. There may also be an Attorney representing whatever entity (e.g, a bank) the Attorney in Fact works with on behalf of the principal.

The Notary may be involved in notarizing a Power of Attorney at a hospital signing. In this case, the notary may need to question the grantor sufficiently so that he or she is certain the grantor is doing this of his or her own free will and understands the nature of the powers granted to the Attorney in Fact (also known as an “agent”), and the notary is advised to record any observations in the notary journal. As a notary signing agent, the notary must also ID an Attorney in Fact who acts on behalf of the borrower at a signing. In such a case, be advised that the notary’s job is to identify the signer, not to verify his or her capacity.

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November 11, 2013

Affidavits — What do you need to know?

BLOG: Affidavits

What is an Affidavit?
An Affidavit is generally a document that has an accompanying Sworn Oath. The person who swears under Oath is the Affiant or Deponent. The person giving the Oath could be a Notary Public, Justice of the Peace, Court Recorder, Commissioner of Oaths, Judge, or other type of official who has the authorization and capacity to give Sworn Oaths.

What types of Affidavits are there?
There are many types of Affidavits. Many are for business. There are various types of Affidavits used in loan signings such as Signature Affidavits, and Occupancy Affidavits. A Financial Status Affidavit is also common in loan signings. For people who want to be able to come to the United States, sometimes it is necessary for a relative or loved one to sign an Affidavit of Support. Many people who lost their passports and can’t find their Birth Certificates sign and swear to an Affidavit of Citizenship.

There are many other types of Affidavits as well!
Jurats commonly have an attestation clause at the end certifying the fact that the affiant made an Oath and the date and signatures.

Other common types of Affidavits:
Affidavit of Heirship, Affidavit of Residence, Affidavit of Name Change, Affidavit of Service, Financial Affidavit, Affidavfit of Domicile, Affidavit of Death, ID Theft Affidavit.

What types of wording can you use in an Affidavit?
You can word an Affidavit any way you like, but if it is to be used as a legal document, please consult an Attorney. Additionally, please do not ask a notary public to draft documents, because many states have restrictions as to what a notary public is allowed to do, especially if it borders on what Attorneys typically do.

How do I get an Affidavit notarized?
Please find a notary on 123notary.com! We have 7000 mobile notaries throughout the nation waiting to help you. Just visit our find a notary page in the navigation bar above!

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Index of posts about commonly notarized documents

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July 9, 2013

The Power of Attorney was rejected by a bank

I was reminded of this situation as I looked through our retweets. Apparantly, our followers like tweets about Powers of Attorney. So, I decided to come up with some real stories about Power of Attorney signings that can inform and inspire notaries everywhere.

It happened many years ago. I remember many of the details. I went to someone’s home to notarize a Power of Attorney for banking. They had a fancy Attorney draw up the document and it looked very professional. Please note: non-Attorney notaries are probably NOT ALLOWED to draft up Power of Attorney documents or other legal documents in most if not all states. I had notarized many types of Power of Attorney documents in the past. Durable Powers of Attorney, Health Care Powers of Attorney, Living Wills, Limited Powers of Attorney, Correction Agreement Power of Attorney, and many others too. Yes, a Living Will is a form of Power of Attorney where it gives someone authority to make medical and other decisions for the principal should they become incapacitated.

In any case, I notarized this Power of Attorney, and the client took it to his bank, and it was rejected. But, why? Nothing was wrong with the document or the notarization. So, what was it? The bank had THEIR OWN form of Power of Attorney. We learned the hard way. After spending hundreds on an Attorney and $50 on me, he now knew what to do. So, I had to meet the client at the bank. I forget which bank it was. One of the big ones. Perhaps Bank of America, Chase, or some other big name. They had a form on card stock that had a carbon copy. There was no room to put my stamp. It was idiotic. They wanted the stamp on the form itself and no Acknowledgment Certificates stapled on. So, I filled out the Acknowledgment wording and notarized the form. Voila — acceptable.

So, the lesson for today is — what the law says is acceptable is very different than what the document custodian (the person receiving and keeping or holding onto the document) might see as acceptable. Sending notarized documents to China, the stamp has to be on the document, but try explaining to them that the California Notary Verbiage needs to be on the document too if they want their stamp. Good luck. Warn your clients of the fact that their bank might not accept the Power of Attorney. The moral of the story is to ask the document custodian what type of power of attorney THEY want.


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