We recently had the opportunity to speak with a seasoned escrow & title officer at a reputable title company that hires the very best notaries from 123notary. He had a number of interesting things to say about how the escrow-title-mortgage industry works, why those darn documents are sometimes late, and what a title company looks for in a notary.
Q. What is the need for a title company? When and how did the current system come about?
A. Before W.W. II, there was only an abstract about a property that you could get. The problem was, this abstract did not insure the results. As sales became more complex, they needed to find a way to remedy this. Title insurance guarantees that, if someone else owns the title to your property and you cannot obtain that title, you get all of your money back. So say you buy a property from a man, but it is actually owned by his sister, to whom it was given in a will. If you cannot obtain title, title insurance guarantees that you will get back all of your money–because the property wasn’t legally yours. The escrow company is the one that does the financials for the lender and sets up the closing, and the title company is hired by the realtors and builders. However, the states have set up the system differently. Some states have companies that do both the title and escrow work, and in some states these companies are separate.
Q. There seem to be a number of hands in the pie: lenders, title companies, escrow, signing companies. How does it actually work?
A. The top of the feeding chain is the realtor. He (or she) finds the lender and the title company. Some lenders want to work with certain title companies, even if the buyer wants to work with a certain one. Each state has its own laws governing real estate. In some states, a seller can use one title company and the buyer can choose another. So there’s lots of work for notaries. The escrow or title company must choose a notary who works in the state where the property is being sold. Since there is no national certification for notaries, the title company has to have a list of good notaries in each state, and in each area of the state. We are constantly looking for the very best notaries. The notary works for the title company or the escrow company. The lender sends docs to the title company (or escrow company, depending on how the state laws are set up). Escrow handles the closing; Title prepares the settlement statement.
Q. Notaries constantly have to deal with late documents. Why are the documents late or full of errors, and how do you personally help notaries avoid this problem?
A. Ninety-nine percent of the time, late documents are the fault of the lender. However, getting a loan is a group effort, and it’s really hard to point a finger at any one person. The lender did not realize, for instance, that something was missing. Maybe the borrower didn’t provide the lender with tax returns in a timely manner, for instance; there could be several pieces of information that were found missing. The loan officer is more or less responsible for the processing of the loan.
Q. What is the training and education you need in order to be a loan officer, and how much does he/ she get paid to do the job?
A. The loan officer is trained on the job. He/ she is not required to have a college degree–or even a high school degree. Of course, most do have such degrees. The loan officer might have started as a loan processor, or an accountant. A loan officer is well paid, and can make as much as a million dollars a year! I know one who does 42 closings a month. The loan officer is paid a percentage of the origination fee. Most lenders (banks) have a retail and a wholesale division. The wholesale division buys loans from mortgage brokers. A mortgage broker can do a loan in one month; a bank takes longer to do a loan. They don’t have enough employees, and maybe not enough good ones. These same employees can make much more money working for a mortgage broker, and lenders often lose good employees. This may have something to do with the errors that frequently appear on the documents from lenders.
Q. On the other hand, what kinds of errors do notaries make that are a problem for you?
A. The notary may miss a date or a signature. I put an X by every place I want signed. You can’t miss these. If a notary makes even one error, no matter what that is, I will never call that notary again.
Q. What about late documents? These can really mess up the notary’s appointments and affect income. If the notary is working for you (the title company), and you know the docs are coming in late from the lender…
A. I won’t call a notary until I have the documents; some title companies are different, and have notaries waiting and waiting. In fact, if I don’t have the documents, and cause a notary to change his/ her schedule, I think the notary has a right to charge me for the extra time and inconvenience.
Q. Now all our notaries are saying, “We like this guy!” What do you look for in a notary? What influences your decision to hire one or to not ever hire the notary again?
A. When I need a notary, the first place I look is 123notary. I look at the notary’s service area, background (profile), reviews, equipment, and hours. We also cannot hire notaries who do not answer their phones, of course. I am looking for experience. If a notary has years of experience, but has zero reviews, that’s a bit odd. I mean solid reviews that are specific, genuine, and obviously well written. It matters. It shows effort. Look at the top New York notaries’ reviews on 123 notary, for example. To any notary looking for work from a title company, I’d say, “Get listed on 123notary. That’s where I’m going to go.”