Posted by Ogdoad on 6/2/04 11:29am
Msg #2584

Loans that don't close

I've had trouble being paid for signings when the loan did not close and I know others have as well. It's frustrating when you do numerous signings with a borrower (especially with e-docs) and through no fault of your own the loan does not go through. Some agencies will do the right thing and pay the Notary for thier time and effort but most won't. The only solution I can think of is to have the borrowers sign an agreement to pay me in the event the loan does not close. I've attatched such a letter and would ask for some feedback from the Notary community here. Thanks.


Signing Service Fee Responsibility


The Principal (Buyer/Seller/Borrower) hereby acknowledges full responsibility for signing services’ notary fee (if applicable) if today’s transaction is cancelled or does not close.


I/we the (Seller/Buyer/Borrower) do hereby release and indemnify _____ Title Co. and _______ Lender of any responsibility of payment for notary signing fees should I/we cancel this transaction or if it does not close for any reason other than Notary error.

In the event that today’s transaction does not close a Notary fee of $125.00 is due within 15 days of dated invoice. I/we agree to pay the notary signing fee to ________CNSA upon receipt of invoice. Notary fee will be waived if the loan does not close due to mistake or error on the part of the Notary Public signed below.



Signed this __________ day of ________________, __________.


X __________________________
Joe Blow

X __________________________
Judy Blue Eyes

X __________________________
Yours Truly CNSA

Reply by sue on 6/2/04 11:52am
Msg #2588

I don't think most borrowers will sign this - I sure wouldn't. Some will say it's a RESPA violation; I have no idea if it is or isn't. But, if your client, the title company & the lender find out about this form, I believe you will be removed from their list of service providers.

Reply by Dennis D Broadbooks on 6/2/04 1:12pm
Msg #2597

I Echo Sue's Comments...

...as I believe you're stepping into uncharted legal territory. You need to talk with an attorney well versed in real estate law before proceeding with an agreement like what you're proposing. Even if the attorney would agree in principle what you're attempting to accomplish, I, like Sue, also believe you won't last long with any SS or Title Company which finds out about your agreement. JMHO!

Reply by Anonymous on 6/2/04 3:32pm
Msg #2601

Wish I had thought of this! I share your frustration with signing services that don't pay. I think this type of letter & agreement is a good idea. I can't imagine lenders & title co's having a problem with it, they're not gonna pay anyway if the loan doesn't close. Why should we be left holding the bag! From where I sit this looks to me like a legitimate agreement/contract between to adults. The fact is the borrowers pay the fee in the cost of the loan & they are the ones ultimately resposible for our fee. So I say go ahead & use it, in the unlikely event they refuse to sign this agreement you could refuse to go forward with the signing, but it's probably better to continue anyway. If you've got this agreement signed and you have to invoice the borrower at least you have something you can use to prove your case. Way to go...

Reply by PAW Notary Services on 6/2/04 3:54pm
Msg #2602

Someone anonymously posted: "The fact is the borrowers pay the fee in the cost of the loan & they are the ones ultimately resposible for our fee."

While this statement is half correct, the second half is not correct. The hiring company, whether it be a signing service, title company or the lender, negotiates a contract with the signing agent for the performance of a duty. Under torts and contracts, the borrower is a third party to the contract, though a recipient of benefits, probably would not be held responsible for payment of fees under the contract agreement.

Personally, I also consider the idea of subjecting the borrower to this kind of action to be unethical from a signing agent perspective. I certainly would not consider establishing or continuing a business relationship with an agent who did subject the borrowers to this.

Further, in my non-legal opinion, the borrowers are already paying for our services (as you stated in the first half of your statement) and this form would result in them having to pay twice for the same service.

Again, your contract is with the ss, title or lender, not the borrower. The borrowers have no obligations to you and your obligation is to whoever hired you.

Reply by HisHughness on 6/2/04 4:15pm
Msg #2603

The problem of signing service non-payment is one of enforcement. In many, perhaps most, areas of the law, the enforcement mechanism lags far behind the assignment of responsibility mechanism, i.e., how is it ascertained that X owes Y? The only area that I know of where the enforcement mechanism is >>really<< effective is in the collection of child support, despite the alleged horror stories you hear. Even the IRS does not have the tools to collect that a single mother does. There is a nationwide network of tens of thousands of lawyers whose sole duty is to collect child support. And even then, there are those horror stories. If we can't effectively collect child support, which benefits a group that looks, feels and smells good to the public, the bar, and the bench, my guess is signing agents and their $75 fees ain't ever going to get the issue addressed. Suck it up and chalk it up to the cost of doing business.

Reply by Forest Sisemore on 6/2/04 4:18pm
Msg #2604

I've seen this type of document included in loan packages on at least two ocassions. Looked & read very much like what you have here. If lenders & escrow co's are starting to include this language why not us? I think it's OK. If the loan does not close or if the borrower recinds, the lender & borrower walk away not owing each other anything. I think we should get paid for our time and work when we do a signing regardless of whether the loan funds or not. Our work and fees are not contingent. After all we're supposed to be objective third party witnesses.

Reply by Anon on 6/2/04 5:43pm
Msg #2607

If I complete a tax return for a client where they are not entitled to a refund, I still get paid. Moreover, if I complete the return and the client does not wish to file (owes money, etc.) I still get paid. As an accountant I get paid for the performance of my work. What the end user cares to do, or not to do, with the product is not my concern. It seems to me (IMHO) that if a notary signer completes the assignment he/she should be paid regardless of whether or not the loan funds.

Reply by PAW Notary Services on 6/2/04 8:38pm
Msg #2616

You said, "If I complete a tax return for a client ..." That's the point. What if the client has you complete a return for someone else (not the client), say his parents or sibling? Do you expect to be paid by the persons who's return you prepared or the client that brought you the work? I submit it would be the client that brought you work. Same with a signing. The ss or title or lender hired you to do the work for their customer, not yours. Therefore you should be paid by the one who hired you. And yes, if you did the work, you should be paid, but paid by the one who contracted your services. Heck, the borrowers don't get to choose who does their signing. They can choose their lender, they can choose their title company, but they can't choose their signer. Of course they can refuse to do the signing, but the consequences may curtail that.

Reply by Anon on 6/2/04 9:21pm
Msg #2617

I did not imply that the borrower should be responsible for payment. Naturally, the one who sought the service should be obliged to pay for the job they asked to be completed. Sorry for the confusion.

Reply by Debbie/FL on 6/4/04 12:23pm
Msg #2723

What if you get work from a Title Company that says "the bank will be sending you your payment"?

Reply by Ogdoad on 6/3/04 1:05pm
Msg #2654

The borrower does not have an agreemnet with the signing service and nothing in my contract (if there is one) with the signing service restricts me from entering into a contract with the borrower. It is the borrower who initiates the transaction wich requires my service. So I am quite sure I am within my rights to contract with and invoice the borrower if the loan does not close or if they choose to recind. To date no one has balked or refused to sing my agreement and as of yet I have not had to enforce it. Borrowers realize they are paying for notary services one way or the other. As I see it, it just makes sence to cover your ass & get it in writing. And btw, I've seen this kind of language included in other loan packages as well, thats where I got the idea. Lenders and Escrow Co's are indemnifying themselves if the loan does not close. Singning services refuse to pay if they are not paid. So it's up to us to look out for ourselves. No one else is going to stand up for notaries & I'm not willing to bend over & take it in the shorts any more...