Q&A: What Can and Can't a Notary Signing Agent Say During an Appointment? Loan Signing System

One of the most common questions that I get is Mark, what can I say and what can't I say during signing agent appointment, Am I allowed to say anything at all about the loan document the borrower is about to sign and can I answer a borrower's question if they ask me? Now this is one of the most debated topics for notary loan signing agents. The reason this is such a hot topic is first and foremost, most state laws prohibit notary publics from giving advice or performing any duties that may be construed as the practice of law, particularly as it relates to legal documents such as a set of loan docs. And federal regulations prevent people from crossing the line and and giving financial advice as mortgage originators unless they are licensed as such. So many notary public loan signing agents try to abide by those laws by never describing anything ratio or what's also stated in the CFRs is communicating with the borrower or prospective borrower about loan closing arrangements provided that any communication that includes a discussion about loan terms only verifies terms already agreed upon by the borrower. This seems to further confirm that providing general descriptions of loan documents do not cross the line and can be formed by notary signing agent. So we've covered the concern of crossing the line from a mortgage professional perspective, but now let's talk about it from a legal perspective. Does describing loan documents cross the line into unauthorized practice of law? The other concern people have when they say a statement like by law and NSA should not be providing a description of any closing documents other than where they should be signing is that they believe they may be crossing into a territory of a lawyer or legal professional. It's obviously a valid concern because that could put you into the territory of UPL or unauthorized practice of law which which as a notary public loan signing agent we want to avoid. Additionally, most states address that a notary cannot practice law unless you are an active member of the state bar. So does describing loan documents equal upl? Here's an example of notary public law as it relates to practicing law from the State of California. I use California as an example because it's one of the most regulated states, if not the most regulated state, but each state has their own UPL laws. California notary law says a commission notary public which is not an active member of the state bar of California should not practice law. If a commissioned notary public has been engaged in the practice of law, the recommended action is revocation of the commission. The last thing you want to do as a loan description of the loan payment or payment amount, interest rate, annual percentage rate, finance charge, payment schedule, assumption of option, prepayment, penalty, or any other loan terms to a borrower in the Closing documents in Section 4.6 of the Code of Conduct states the notary signing agent may identify and provide a general description of a fee or charge appearing on the signer's HUD1 or closing disclosure or other closing statement. So to summarize the Code of Conduct, it clearly states a notary public loan signing agent can present the borrower to the loan document and can state the general purpose of the document. The Code of Conduct also clearly states a signing agent can give a general description of any loan term to a borrower in the closing documents, including the loan amount, including the interest rate, APR and et cetera. So remember the example comment found in many forums? I mentioned earlier that BYLAW and NSA should not be providing description of any closing documents other than where they should be signing. Well, the Code of Conduct clearly states otherwise. Providing a general description is actually allowed. Now, since the Code of Conduct isn't actually law, it's more like guiding principles. Let's dig a little bit deeper to see what the underlining laws are we're hoping to abide by. Part of the underlying laws that many notary public loan signing agents are trying to abide by is one Avoid crossing into activities of a mortgage originator providing financial advice and or two Avoiding crossing into the activities of a lawyer providing legal advice. First, let's talk about crossing the line into a mortgage originator. So the question is, does providing explanations or descriptions such as terminology and verifying terms already agreed upon constitute a licensed mortgage professional activity? Luckily for us, the US Government has provided us clarification on which activities constitute mortgage origination activities that require a license versus activities that do not within the Code of Federal Regulations or the cfr. The CFR are the laws that govern many agencies including the Consumer Financial Protection Bureau, and it's implemented through the Nationwide Mortgage Licensing System or nmls. So borrowers are protected this excerpt is directly from the CFR stating what activities do not constitute offering or negotiating terms of a loan which would require a license and would cross any notary public loan signing agent into dangerous territory. Offering or negotiating terms of a loan does not include providing general explanations or descriptions in response to customers. Queries such as explaining loan terminology or for example Debt to income ratio or what's also stated in the CFRS is communicating with the borrower or prospective borrower about loan closing arrangements, provided that any communication that includes a discussion about loan terms only verifies terms already agreed upon by the borrower. This seems to further confirm that providing general descriptions of loan documents do not cross the line and can be formed by notary signing agent. So we've covered the concern of crossing the line from a mortgage professional perspective, but now let's talk about it from a legal perspective. Does describing loan documents cross the line into unauthorized practice of law? The other concern people have when they say a statement like by law, an NSA should not be providing a description of any closing documents other than where they should be signing is that they believe they may be crossing into a territory of a lawyer or legal professional. It's obviously a valid concern because that could put you into the territory of UPL or unauthorized practice of law, which as a notary public loan signing agent we want to avoid. Additionally, most states address that a notary cannot practice law unless you are an active member of the state bar. So does describing loan documents equal upl? Here's an example of notary public law as it relates to practicing law from the state of California. I use California as an example because it's one of the most regulated states, if not the most regulated state, but each state has their own UPL laws. California notary law says a commission notary public which is not an active member of the State bar of California should not practice law. If a commissioned notary public has been engaged in the practice of law, the recommended action is revocation of the commission. The last thing you want to do as a notary public loan signing agent is get your notary commission revoked because then you wouldn't be able to be a notary public loan signing agent and make 75 to $200 per appointment. So finally, this begs the question what does practice of law constitute? And does describing loan terms in a set of loan documents fall under the practice of law category? Unfortunately, there isn't an all encompassing list of every single activity that constitutes practice of law. Especially because every state is different. However, using the same state of California's practice of law has determined in courts to include the following main performing services in court cases, providing legal advice and preparing by or writing or creating legal contracts and that secure legal rights. Of course, like I stated earlier, each state varies when it comes to unauthorized practice of law. And if you're in an attorney state, not an escrow state, but in an attorney state, it could be even more limiting as what you can say as it's probably safest to not describe the documents, just point where they sign. But this is exactly why the Code of Conduct correctly states in their guiding principles that a notary signing agent may not provide legal advice about loan terms. But providing general description of loan documents as long as you're not giving legal advice does seem to fall within the scope of a notary loan signing agent. Describing something that's pre agreed upon falls into that scope. This is great news because escrow officers, mortgage professionals and signing services expect a notary signing agent to have a certain level of education and ability to describe loan documents to the borrower so they feel comfortable signing him. So how do we avoid crossing the line in unauthorized practice of law or activities of a mortgage originator? Generally speaking, describing loan documents is not only okay in my opinion should be encouraged to create a comfortable signing environment for the borrower during what can be a stressful time during their home buying or refinancing process. However, there will be many questions a borrower asks that if answered by you could cross the line into giving legal advice or constitute as a licensed mortgage originator activity. Generally, if you give a description of the document and the borrower then has a question Going deeper into the specifics, there are two things you can do to protect yourself from crossing into dangerous territory. You can direct the borrower to the section within the loan document that answers their questions. You can point to where the answer exists, or you can politely recommend that they call the loan officer. Anything more than a description can turn into a longer explanation and that's the gray area better not to cross into. In fact, the Code of Conduct also has a specific guideline similar to the one I just recommended that outlines how to respond to borrowers questions. And this guiding principle is to protect you from ever crossing into the legal or financial advice territory. Code of conduct section 4.3 the notary signing agent may respond to a signer's specific question by directing the individual to read the provisions in the critical or other closing documents identified by the NSA that may answer the question or by referring the individual to lender's representative or the closing agent associated with with the transaction. Let's summarize this. If a borrower asks a question, let's say for instance, do I have a prepayment penalty? Based on what we've learned so far, you can point to page one of the closing disclosure that states yes or no. Anything that needs greater explanation because you cannot point to it in the loan docs would most safely be answered by having them call the loan officer. Keep in mind if it is not a question that has to do with something that's specifically in their loan documents. For instance, if they simply ask what is an impound account? You can answer by saying generally speaking, that is a savings account for taxes and insurance. However, if they start asking the specific financial and legal implications of their impound account, then the safest action is to refer them back to their loan officer. So what have we learned in this video? Based on the information produced by the Signing Professionals Workgroup under the guidance of the nna, the Code of Federal Regulations produced by the US Government and other resources I've referenced, it seems clear we can give general description of loan documents and answer general questions. And if you are educated enough and provide a concise enough general description the document up front. Very rarely will the loan officer or escrow officer ever need to be called. In my experience, over 90% of questions can be answered effectively by pointing to the information in the loan docs. This is key to knowing exactly what every loan document means and where the information exists. Your job is to be so educated that your general descriptions don't need any follow up questions. And that is exactly why the Loan Signing system will provide you with the most detailed education about every single loan document so you can decide what you can use in your business while abiding with your local laws and best practices at every single signing. No other course even comes close to providing this level of detail about loan documents. At its foundation, the Loan Signing System teaches that an educated notary public loan signing agent is a busy signing agent. The more educated you are, the more successful you can become. I will list a link to all the references I used in this video in the description below and click on the link on this video to get the only course that teaches you how to go through an entire set of loan documents with the most concise and effective general descriptions to a set of loan docs so you can build a successful notary loan signing agent business. I'm Mark, I teach a loan signing system and I look forward to helping you become a successful notary loan signing agent at its foundation. The loan signing system teaches that an educated notary public loan signing agent is a busy signing agent. The more educated you are, the more successful you can become. I will list a link to all the references I use in this video in the description below and click on the link on this video to get the only course that teaches you how to go through an entire set of loan documents with the most concise and effective general descriptions to a set of loan docs so you can build a successful notary loan signing agent business. I'm Mark. I teach a loan signing system, and I look forward to helping you become a successful notary loan signing agent.