Posted by Anonymous on 9/12/05 8:19pm
Msg #64852

What do you do when...

Has this happened to you? I am seeing a lot more loans where borrowers beleive that they are getting a fixed rate and are not, or they think that the variable interest rate will change in 3 years when the docs say they change every month. I know we as notaries are there only to witness signatures, tell them where to sign and NOT explain anything. But I do say this is the Note that has this information, your rate, 1st payment date & amount. THATS IT. I also usually state this is the Deed, this is the Sig Aff...

But the other day this person started to read every single word in every document and said she was not going to sign because that was not what she wanted. In these situations I usually tell them they can call their LO with any questions or if they would like to continue with the signing they can always use their 3 days to cancel. She signed half, called the LO and the LO convinced her that it was fixed for 3 years. She wanted me to show her where it said that and I said "I do not know where it says that." She kept urging me to show her & I still stated that she could aske her LO where to find that exact document as I could NOT find it. She did not sign the docs, & I took them with me. Basically it was a variable starting at 7% and could change every month!!!! Today I got a message from the LO and he asked me to please go back and continue signing docs and NOT explain anything not even names of documents.

What would you do?? I feel really bad for these people that are being misled. I forgot to mention that it is a not so good area & I dont even think the house is worth what they are financing.

Any thoughts would help. THANKS

By the way I am in CA

Reply by Becca_FL on 9/12/05 8:54pm
Msg #64854

If it's a fixed/variable ARM, you SHOULD know where the first change date is on the Note and be able to point it out to the borrower. If you are not doing this, you are doing the borrowers and the companies that hire you a disservice. JMHO

*Please note that I said point and not explain.

Reply by Nancy4_FLA on 9/12/05 9:34pm
Msg #64863

I agree with Becca. I always show them where the rate is, the P & I and if it is an ARM where the information is regarding 1st change dates etc. I do not explain, I only point it out. I think one of the problems is the sales talk that the LO's are now using to get borrowers into Adjustable rate loans. Most people are afraid of ARMS and do not want them so the mortgage cos have now changed their sales pitch and are stating it is a fixed rate loan for 2 years, 3 years etc but actually it is the same loan as a 2 year or 3 year ARM. The borrowers only hear that their loan is fixed and they do not realize the type of loan the are getting until we show up for the signing. I have had it happen several times, borrowers didn't know they had an ARM until the signing, they didn't know they had a pre-payment penalty etc. They end up calling their LO and many times it is straighten out and sometimes the borrower refuse to sign.

Reply by SDgirl_CA on 9/12/05 9:41pm
Msg #64866

Thanks for responding so quickly ( I dont know how or why I came up Anon the 1st time)! I always point to where you can find terms of the loan but what I wanted to know is.. when a LO is flat out lying to their client and the borrower is asking to see the paperwork that does NOT exist what do you say? I have been doing this for over 2 years now and have just started seeing this lately. At times I dont know if I am cut out for these. Would you refuse to do this signing? I happen to get 3-5 signings from this company a week and have never had this problem before.

Reply by Becca_FL on 9/12/05 9:50pm
Msg #64869

If it's a flat out bs story, point to the terms on the Note that disprove what the LO is stating and have the bwr call the LO. I have also excused myself from the table to speak with the LO if the terms differ from what the LO says. Who knows, the processsor may have screwed up and sent the wrong docs.

Reply by Nancy4_FLA on 9/12/05 10:08pm
Msg #64878

What is the first adjustment date? If it is 2 or 3 years from now then it is fixed for that period of time. Some times it is the difference between how the documents actually read then what the LO is telling them but both could mean the same thing. The borrower is seeing an adjustable rate Note but the LO is telling her it is fixed. It might be fixed at the 7% rate until the first adjustment date or as Becca stated he could just be lying to her or the processor could have made a mistake preparing the docs.

Reply by JanetK_CA on 9/14/05 3:37am
Msg #65067

I'm seeing this more often, too. And major errors on the Settlement Statement. When you show up and the borrowers are telling you that they were looking to lock in a 30-year fixed rate and the Note clearly says "interest-only option ARM", you have to wonder! I, too, think we should point out those key things on the Note, without getting into any explanations. However, when it strongly appears the LO is feeding them a line of BS, sitting there quietly and remaining neutral is one of the hardest things we do in this business. I just tell them outright that I can't comment on that because it's my job to be the neutral party.

Reply by MelissaCT on 9/13/05 12:32pm
Msg #64955

It is your responsibility to know the documents & to be able to show where it says what. You can' t explain how figures were compiled or speculate on terms, but you can point out the interest rate & terms contained within the note or riders.

I had a similar situation where a bwr didn' tknow there was a 3-yr prepay penalty on the loan. I pointed it out in the rider to the note/deed. When asked if a sale within that period would trigger the penalty, I had to defer the answer to their LO, because I legally can't answer a question like that, but if the answer is in black & white on the loan documents, you should be able to direct the borrower to the answer. It's part of your job.