Marcy had to go back to the hospital to notarize Esmerelda, the old lady who could barely talk. Her family assured Marcy that it would be okay this time. Marcy wanted her travel fee in cash at the door. She explained that if the signer was not fit to be notarized, she would legally have to decline notarization, but didn’t want to have any issue getting her travel fee should she decline. A month back, she drove an hour to a jail, waited for another hour only to be told that the inmate had been moved. The client who met her there didn’t want to pay a travel fee because Marcy “didn’t do anything.” Additionally, Marcy would have a beneficial interest in getting the document signed if she didn’t collect her travel fee at the door. She would want it to be signed so she could collect her $30. In any case, they paid Marcy her travel fee. Esmerelda was able to communicate and actually did understand the document. She summarized it. Marcy was able to do the Signature by X procedure and get her notarized that evening.

An hour after the hospital notarization, Marcy had a loan signing. At the signing, the borrower asked about the pre-payment penalty. Marcy found it in a snap since she had been studying what information is in what document (like all good Notaries should.) But, Marcy started to read the pre-payment penalty to the borrower and even explain what the terms of that part of the agreement meant. Marcy had overstepped her bounds. She knew she couldn’t give legal advice, but she wasn’t aware that explaining a prepayment penalty could be construed as legal advice. Luckily for Marcy, the Lender gave her a quick lecture on not giving legal advice, and Marcy was very careful from that moment onwards.

After Marcy’s two jobs, she came home only to find Patricia waiting for her on the front porch. Patricia had something urgent to tell her. One of Patricia’s other friends who was a Notary was getting sued, and her E&O insurance wouldn’t help. Marcy asked why. Patricia said that the error was not a Notary error, and that E&O only insures you against Notary errors or omissions. It was the Lender who made an error, and the borrower was suing everyone in sight. Even the Notary who had nothing to do with it. It would have cost this Notary $30,000 in legal fees to defend herself from this angry borrower. Then Patricia told Marcy what a Hold Harmless Agreement is. The Lender has their documents, but if you make the borrower sign a Hold Harmless, that can prevent them from suing the Notary as they agree not to hold the Notary responsible should anything go wrong with their loan. Patricia was a great source of knowledge tonight. So, Marcy consulted an Attorney and got a quick Hold Harmless Agreement written out, and she kept a stack of them in her car so she would be sure to have one for every loan signing form that day forward. She didn’t want to end up like that other Notary! Good God!

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Point (28) Beneficial Interest
It is illegal to notarize a document that you have a Beneficial Interest in. But, what constitutes Beneficial Interest? If you or a close family member is named in the document as someone who will receive money, or privileges, then you could be said to have Beneficial Interest. If you would gain in any way from the document being signed, you have Beneficial Interest.

One interesting twist on this concept is that Notaries who get a travel fee don’t always collect the fee in advance. If you are in front of the signer who doesn’t have proper ID, and they ask you to notarize them anyway or you won’t get your travel fee, then you have Beneficial Interest. You won’t get your $35 if you don’t comply with their illegal requests. As a Notary, you are expected to uphold the law, and if your travel fee rests on you bending the law for someone, you are not only encouraging yourself to do something questionable, but you have Beneficial Interest in the document being signed which is purely illegal.

Financial Interest means that you will benefit financially from a document being signed, while Beneficial Interest means that you will benefit in one way or the other — perhaps financially, or perhaps in some other way.

Point (29) Negligence
What constitutes Notary negligence?

Failure to administer an Oath
Failure to take a thumbprint in your journal for a deed or Power of Attorney
Failure to identify the signers
Failure to inspect signatures
Failure to make sure signer signs in front of you for a Jurat
Failure to completely fill out a journal entry

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Point (30) E&O insurance

Many companies want to hire Notaries with E&O insurance. It makes the Notary look more professional and covered. In real life, it protects you only from honest mistakes on notarizations. Most of what you are doing involves overseeing large business deals that get sent back to the lender via courier. Most of the problems you could encounter might include signing the wrong way (even though it might be notarized correctly), getting documents back late, a missing bank check, cross-outs, no-shows, or other mistakes. Notary errors on notarized documents might account only for 25% of the problems that occur in signings that could lead to damages.

If the Lender makes a mistake that causes the borrower damages, you could get sued, and E&O will not cover you since YOU were not the one who made a mistake AND because it is not a Notary mistake. One of our Notaries dropped out because she got sued for more than $100,000, because of some fraud that the Lender was accused of committing. The borrower was so angry that they want to sue everyone in sight regardless of fault. Unbelievable!
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Additionally, in 2013 Notaries who had enormous E&O packages were being sued on a regular basis. You are like a guy in a Mercedes driving around a slum. You have the word “Target” written on your forehead and taped to your back. Sooner or later you will get mugged. Think like a Ninja. You don’t get mugged — you mug THEM!

My advice is to think carefully before investing in a handsome E&O package. If it will land you a good account with Chicago Title, then do it. Otherwise, it might make sense to have a smaller E&O premium and have all of your borrowers, Lenders and signing companies sign a HOLD HARMLESS agreement. The agreement should be drafted by an Attorney and could state that if there are any damages by negligence or omissions by the Notary, that you (the Borrower or Signer) will not hold the Notary responsible.

You might also like:

30 Point Course Table of Contents
http://blog.123notary.com/?cat=3442

The 30 Point Course Final Quiz – Jeopardy!
http://blog.123notary.com/?p=14557

Posts about E&O Insurance
http://blog.123notary.com/?tag=eo-insurance

Help, I’m being sued, and E&O insurance won’t help!
http://blog.123notary.com/?p=3570

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By now, Marcy had decided to really study her text book well. In this last signing, she narrowly avoided two disasters.

MARCY: Hi, I’m Marcy and I’ll be your signing agent this evening.

RUTH: Thanks for coming Marcy. I’m all ready.

MARCY: The Lender asked me to make sure we include a cashier’s check for $2500 in the package. Do you have the check?

RUTH: Oh, he didn’t remind me. But, I have it somewhere.

MARCY: Let’s take care of the check first, otherwise we’ll forget all about it and you’ll lose your lock.

RUTH: That bad?

MARCY: It’s happened before. I read about it in my course and I’m not making any careless mistakes.

RUTH: Here it is.

MARCY: Okay, the course says to staple it to an eight and a half by eleven paper and put it on the top of the stack of documents in the FedEx so the first person to open the package will immediately see it and hand it over to the correct person… Done! I’m putting it in the package, but at a 90 degree angle so I’ll see it. That way I won’t forget to make sure it’s first in line after we add all of the other documents we’re signing tonight.

RUTH: Boy, aren’t you careful?

MARCY: Well, you’d understand if you knew how many mistakes notaries often make in this industry.

(10 minutes later)

RUTH: Okay, I’ve initialed all of the pages of this Deed of Trust. Now, you need to notarize it, right?

MARCY: Correct… (stamps the document) Oooh! That came out smudgy. I better do it again.

RUTH: It looks fine. I wouldn’t worry about it.

MARCY: The Deed of Trust is a recorded document, and that means that it goes to the county clerk’s office. Some of the clerks are picky, and they have the right to reject a smudgy seal which might cause the loan to not go through on time. So, I need to attach a loose certificate and make sure my stamp comes out clearly… Perfect.

RUTH: You certainly dot your i’s and cross your t’s!

MARCY: If I didn’t, you would lose your loan.

(a day later)

LENDER: Marcy, I noticed you crossed out your Notary seal on the Deed of Trust. Why did you do that? That looks very sloppy.

MARCY: Quite to the contrary, the seal was smudged, and the county recorder would be unlikely to record such a document which is why I attached a lose certificate.

LENDER: But, did you have to staple it on? It is very difficult to disconnect — and messy.

MARCY: Legally I am required to attach the certificate. Completing loose certificates that are stamped is illegal because they can easily be used for fraud by being attached to a different document; So by un-stapling my work, you are leaving yourself open to looking very questionable.

LENDER: But, we always do that.

MARCY: Well, you are at liberty to do what you like, but I am not at liberty to break my state Notary laws! If the Lender had the certificate wording on a separate piece of paper without a page number, it would be removable so that nobody would have to see the cross out should there be an error, and once in a while there are stamping errors. Notary seals are not always clear the first time.

LENDER: Isn’t there a better way to do this?

MARCY: If you want your loan to go through, and for it to go through legally, then no — there is no other way to do this.

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Point (15) A handful of technical points
These technical points fall into the category of signing agent knowledge and are generally above and beyond purely Notary knowledge. Being an expert at these points will make you a much more impressive signer.

Checks in Packages
If you are sending a cashier’s check in a package, please note that these get lost much more frequently than you might think and the borrower’s loan will be delayed if this happens. These checks are for high dollar values, so make sure they don’t get lost between all of the many hands that will touch this loan package.

Staple the check to a 8.5 x 11 piece of paper, and put this paper at the front of the loan package so that whomever opens it (generally a secretary) will see it immediately and notify the person in charge of the loan. If you put the check in the middle of the documents, the check will not get seen right away, and there could be a delay. If you don’t staple the check, it will likely get lost in the shuffle.

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County Recorder Rejections
If you make a mistake on a recorded document, the county recorder can reject the document which could slow down the loan processing time. The borrower might even lose their lock which would be very costly. Take extra care when notarizing recorded documents. Which documents are recorded?

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Dates
What is the difference between a Document Date, Signature Date, Transaction Date, Rescission Date and a Notarization Date?
The document date is a random arbitrarily picked date that is often subscribed in the document. It is often the same date the document is signed, or perhaps drafted. The signature date is the date a document is signed. Of course, if there is more than one signer, there would be more than one signature dates. A Notarization date is the date a document was notarized. Legally, a document can be Acknolwedged more than once though! A transaction date is the date that a document is signed. A Rescission date is the last day to rescind. There, you have five dates to remember!

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eDocuments, eSignings, and eNotarizations
eDocuments are documents sent by email to the Notary to be printed out. eSignings are signings done on a laptop with the borrower doing digital signatures on a signature pad — but, with hardcopy regular notarizations using a paper journal. eNotarization are Notarizations where the notarization uses a digital seal and digital journal.

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The Prepayment Penalty
The Prepayment Penalty could be mentioned in any of these four documents, or perhaps even more. The Truth in Lending says you will, won’t or may have a prepayment penalty. The HUD may reference the prepayment penalty as well. But, the two documents that offer the most thorough information on the prepayment penalty are The Note (which every loan has) and the Prepayment Rider which is only included in a handful of loans that have complicated prepenalty agreements.

Most Notaries we talk to do not know the best place to look for thorough information on the prepayment penalty. They usually want to source the TIL, but this is wrong. Try to be a little more familiar with these very basic loan concepts as your borrowers will be more impressed with you if you do.

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Recorded Documents
Here are various types of recorded documents sorted into categories.

Deeds: Deed of Trust, Riders to Deed, Quit Claim Deed, Grant Deed, Inter-spousal Grant Deed, Warrantee Deed

Title Docs: Subordination Agreement, Mortgage

Legal Docs: Affidavit of Trustee, Power of Attorney (sometimes recorded), some states record the Note although most don’t.

Lien Docs:Judgment Liens, Unsecured Tax Liens, Revenue & Recovery Liens

Other:Addendum, Condo Homeowners Approval, Tax Certificate, Affidavit of Continuous Marriage (state specific)

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Commonly Notarized Documents in Loan Packages
Most packages will have certain documents to be notarized such as a Deed of Trust or Mortgage in all loans. It is also common to notarize other documents such as a Signature Affidavit, Occupancy Affidavit, Correction Agreement Limited Power of Attorney, Subordination Agreements, Grant, Warranty or Quitclaim Deeds, certain Riders, Identity Affidavit, and more.

Spousal Signatures
If a spouse is not on the loan, the documents they sign might vary from state to state and lender to lender, but these documents are typical documents that they need to sign:.
(a) The Deed of Trust and accompanying Riders if any.
(b) Grant Deeds and/or Quit Claim Deeds if someone’s name is being removed from Title.
(c) The Right to Cancel if the spouse is residing in the property.

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Trusts
Notarizing Trusts is not brain surgery. However, when people sign with a capacity, it is common to sign their name, a comma, and then their capacity. Al Smith, as Attorney in Fact for Joe the Plumber. You are only notarizing Al Smith, but the additional information is sometimes helpful or critical. As a general rule, unless the document custodian wishes otherwise, You should have trustees sign as trustees: John Doe, as Trustee.

Then, there are Living Trusts which are instructions for what to do if a signer is incapacitated. These are usually long documents drafted by an Attorney that can be more than forty pages long in many cases. Living Trusts are quite different than regular Trust Documents and Wills.

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You might also like:

30 Point Course Table of Contents
http://blog.123notary.com/?cat=3442

30 Point Course (16) Initialing
http://blog.123notary.com/?p=14463

Don’t put the FedEx in the drop box if there is a check in the package
http://blog.123notary.com/?p=2831

Spousal Signature Requirements
http://www.123notary.com/forum/topic.asp?TOPIC_ID=244

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