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March 24, 2013

March Phoninar

Our February phoninar was so popular, I am publishing another phoninar. We will be discussing many of these issues over the phone with selected notaries.

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Initialing incorrectly typed names

Many loans require initials near the corners of pages of the Deed of Trust, and perhaps other documents. It is common for notaries to initial changes to information on documents as well, or dates on the right to cancel. Some lenders want dates on the right to cancel be acknowledged by initialing while other lenders only want initials if the dates are crossed out. Some lenders allow cross outs while others do not. This business is confusing if you ask me. Be prepared and follow directions! But, where do initials go if a name is wrong in the signature section of a document?

——————–      ———–
James J Doo         Date
              JJD

The initials for James J Doe, which was misspelled in the signature section of this mock segment of a mock documents — should be placed under the last several letters of the last name. Why?

Loans that need correcting often go through a PROCESSOR or a quality control department. They type in the correct spelling of the name SOMEWHERE. But, where is that somewhere located? I have been told by numerous people in the loan industry that the correctly spelled surname goes to the right of the incorrectly spelled surname. So, if you put your initials wherever you feel like it, you will be getting in the way of the processor, and compromising the loan. You can not put initials above, to the side to the left or wherever on a name change. Additionally, you do not generally need to cross out unless instructed to do so. An initial and a phone message plus a note for the lender does the trick!

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Issues with Power of Attorney signings
Most notaries have never done a Power of Attorney loan signing, nor have most ever notarized a Power of Attorney. If an Agent has Attorney in Fact priveleges for a Grantor (The Principal), then they can sign on behalf of the Grantor for specific types of tasks which they have been authorized to do. If the Agent is authorized to take care of financial transactions, then they might be able to sign a loan on behalf of the Grantor. But, it is not so easy. You need a hard copy of the Power of Attorney at the signing that gets sent in with the package. You also need to know the wording for an Agent to sign. The wording I normally use is:

Signature of Agent, as attorney in fact for John Doe
The Agent does NOT forge the signature of the Grantor, but signs their own name and then indicates their CAPACITY as an attorney in fact.

So, what’s the problem? This sounds easy if you know what to do. It is easy. However, lenders are so picky about this type of signing that even if you do it right to the letter, many of these loans still are rejected. Please keep in mind that loans are typically sold to other companies, and if there is any tiny problem or issue with the loan, the lender might elect to do a redraw and resign.

So, what do you do?

CALL THE LENDER / Loan Officer and go over step by step exactly how he wants everything to the letter. Obey instructions to a tee — or else!

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When not to call the loan officer

Notaries are call the lender happy. Or, they call the signing or Title company whenever the borrower sneezes. But, a call to your contact person could keep you tied up on the phone for 40 minutes if you are not lucky. Should you be selective about when you call? When you call is really up to your contact person(s). If they want you to call for every little thing — then do. If they leave it to you, then call only if you have to. Assessing how important a given situation is to call the lender could be critical to the timeliness of your signings.

Q. What if the borrower signs where it says I wish to rescind by accident on the RTC?
A. Don’t call the lender — go to the borrowers copies and get another copy.

Q. What if there are errors on the 1003?
A. There are always errors on the 1003. Explain to the borrowers that this document is not a loan document, but legally has to be included in the package — and that it traditionally has at least three errors. It is customary to misspell your wife’s name, the name of your University Alma Mater, your dog’s name, your social security number and other things too. If there are no errors on the 1003, then something is definately wrong! Approach this document with satire for your mental health. I would not call the lender about this document unless the lender wants to spend his time explaining this nonsense that his lazy clerks created.

Error on an Acknowledgment Certificate

That is YOUR responsibility. You are the notary, right? Problem on the certificate? Add a loose certificate. You do keep loose certificates with you when you go to signings, right? If your answer is no, then please resign your commission and find another profession. You are not a real notary and are a shame to the profession. Be prepared.

The borrower doesn’t like the fact that the APR is higher than their rate

If you attended loan signing 101, you should be able to answer this on your own without bothering the lender. UNLESS you are in an Attorney state in which case you might ask them to read a definition printed by your lender somewhere. Some loans have an FAQ page, while the TIL might publish an explanation of the APR. If you are smart, you can avoid a time consuming call to the lender about this commonly asked question.

Q. When is my first payment due?
A. Look for the TIL, HUD, Payment Coupon

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The Security Instrument

Which document is the security instrument?
This is one of the most commonly asked loan signing questions. Signing companies will quiz you on this one and so will I. If you don’t know it, then I will assume you know nothing about loan signing, and I will probably be mostly correct. The DEED OF TRUST or Mortgage is the security instrument in a loan — NOT the note, and not other documents.

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Which documents are recorded in a loan?

I ask this question to notaries all the time. The answers typically include the Deed, Note, Right to Cancel, the TIL, etc. Of these documents only the Deed of Trust, and in very few states the Note would be notarized. But, only the Deed of Trust of Mortgage is recorded of the documents mentioned. Other types of Deeds such as Quit Claim, Grant Deeds, Warrantee Deeds, Subordination Agreements, Power of Attorney, or Lien Documents might be recorded as well.

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Which party has the final say in rejecting a notarization on a Grant Deed?

The lender could reject such a notarization, and so could the Title company. But, the agency with the final say is the law of the land which in this case would be the County Recorder which is where the document will ultimately be housed if accepted. The County Clerk’s County Recorder office would be the custodian of the document and has the highest level of authority to reject a notarization.

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Names not matching?

What do you do if the name on the document doesn’t match the name on the identification document? You can only notarize the signer based on what their identification says, otherwise you are breaking the law! You should call the lender immediately and consider filling out the Signature Affidavit with the name variations on the identification and the document. You might be required to initial under the name in the signature section of the documents if the lender asks. That is the lender’s call, not yours, so make the call.

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E&O Insurance makes you safe, right?

Q. Does E&O insurance cover you if you make a mistake at a loan signing not related to a notarization?
A. No.

Q. Does E&O insurance cover you if the lender makes a mistake that ends you up in court when the borrower becomes irate and sues everyone in sight who is part of the transaction in any way, shape or form?
A. No

Q. Will E&O insurance cover you for a fraudulent act during a signing?
A. No

Q. Will E&O insurance cover you if you put the wrong date in the Right to Cancel?
A. No.

Q. So, when does E&O insurance cover you and why buy any?
A. If you make a mistake on a notarization that could cause damages to someone

Q. Should I mention that I have E&O insurance in my profile?
A. Yes, and also mention the AMOUNT you have.

Q. Does having a large E&O policy make me a target for lawsuits?
A. Unfortunately, there have been several recent lawsuits where notaries’ E&O was used to make claims from.

Q. Does having a large E&O policy make me a good candidate for big Title companies?
A. It is one of the things that many Title companies like. It shows you are serious and that you are “covered”, even though it really doesn’t cover much.

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What type of identification is acceptable for a notarization?

It should be:

Government issued
Photo-ID
Serial Number
Expiration Date
Show physical likeness
Physical description

Also, the lamination should NOT be peeling otherwise it could be fake. The signature should be UNDER the lamination otherwise it probably is fake. You should be up to date on state issued ID standards for all states so you can recognize a fake immediately. China makes many convincing fakes for US$200. Can you tell a fake ID?

BTW — you should always require journal thumbprints, because ID’s can be faked, but journal thumbprints can not be.

Oh, and did I mention that the name on the ID must match the name on the document for the signer? If the name on the document is a shorter version of a matching name that is okay.

Name on document John Smith
Name on ID John J Smith
Verdict: Okay

Name on document John J Smith
Name on ID John Smith
Verdict: Not acceptable — notarize as John Smith only in this case.

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Loose Certificates in the mail

Q. A lender asks a notary to send a loose certificate in the mail. The notary sends one, but the lender comments that the certificate is missing a thumbprint. What did the notary do wrong?

A. This is a trick question. The thumbprint is not required on the certificate in any circumstance. But, it is illegal to send a loose certificate in the mail as it can be used for fraud. Therefor, what the notary did wrong was to not request that the original document and certificate be sent to him by Fedex. Then the notary could destroy the original certificate and staple a new on in its place and mail it back. That would be legal. Interesting.

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What information is in the body of an acknowledgment?

An Acknowledgment has a:

Venue
The Venue has the state, county, and a squigly bracket thing, plus the letters s.s. which means scilicit which is Latin. So, there are four components of a Venue.

Body
The body of the Acknowledgment has some boiler plate wording. But, the notary is responsible for inputting the date of the transaction, the name of the borrower, the name of the notary public, and crossing out the his/her/their, the (s) if necessary, and other cross outs.

Signature section
The bottom of the acknowlegment section has room for the notary’s signature plus their official notary seal if you are in a state that uses notary seals.

Optional information section
Enter in the number of pages in the document, document name, and document date here, plus information about the signer’s capacity (state specific), and perhaps even a right thumbprint of the signer for good luck. Documents going overseas should be treated with caution and a thumbprint is often appreciated by the authorities.

You might also like:

April Phoninar: Selected Notary Topics
http://blog.123notary.com/?p=4382

Minimum competency test study guide
http://blog.123notary.com/?p=4337

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