Posted by TitleGalCA on 9/18/05 2:26pm
Msg #65926

Witness' & Capacities after the fact...my (long) ramblings

We all know capacity is not recognized in an acknowledgement (at least as far as CA is concerned). When I receive docs (to record) and the software program the lender uses automatically prints it in the ack, sometimes the notary crosses it out, sometimes not. When not crossed out, I don't touch it, it goes to my county recorder as is and it records (in spite of being "wrong" in the technical sense). It doesn't make the certificate void. That leads me to believe it's a harmless "wrong". No harm, no foul, it just doesn't matter, so I'm dismissing that.

It's the witness thing I'm stuggling with. Some states require witness' to certain docs, including the DOT. The DOT is the document of record, making it public knowledge that there is a purchase money loan (or second, or heloc) lien on the property, supporting the note. So in my mind, if a title or settlement company were in the practice of adding witness' after the fact, in a witness state, the lender who loaned on the property would be howling about anything that would nullify their note/DOT. Make sense?

I'm trying to imagine a worst case scenario: If a smart/"lets cheat the system" borrower knew all this (that witness' were required, and witness' were added after the fact, and not present at their closing table) could they in turn go to the lender and say..."hey, when I signed my loan, I was under psychiatric care. I was taking lithium and not in my right mind, I didn't know what I was doing. There were no witness' at my signing (other than the notary, witness no. 1) but if I had that second witness...they would have seen my hand was shaking, I was delirious and not of sound mind to sign a deed of trust". I would think a some lawyers might be able to make case about the validity of that note...but would have to work pretty darn hard for it. (this is all based on the assumption that witness' are required for reasons of being in sound mind when making the obligation of the note/DT - correct me if it's wrong).

Conclusion: the lender is in jeopardy then, in that scenario. It's in lenders best interest to make sure *valid* witness' were present at the closing table, to protect the enforceability of the loan.

Next conclusion: the "who did it" and "why" and "at who's direction" for adding witness' after the fact becomes paramount. If settlement/title company added witness who were not present at the table, did lender authorize it? Then the burden is on them. Did the title company, settlement company do it...without lenders authorization? Now...that's a whole different animal and the LENDER should be coming down on those company's with all their considerable weight and authority.

I'm hoping that it's clear that lender is either the instigator OR the *potential* wronged party in PAW and Sylvia's concerns about the situation in Florida and elsewhere.

For the record, I respect them both...they have more experience than me (especially in being a NSA) and I read every post either of them make on this board as it's so valuable. Further I LIKE them both. Before this goes to PAW/Sylvia v. titlegal on this issue I want to make it clear I think they're both fabulous....I could go on and on about how fabulous but that's a given, for everyone.

For this one issue however, it hits my backyard, so I'm having my say. I think it's an important one, and could be mis-understood, creating a sense of distrust of title companies for all the SA's on this board, enough so that SA's could make some bad decisions based on distrust (reference the guy who was scared to notarize a DOT, because he got a "copy" that was whited out, thread #65500). I think it's important to understand the workings of every player in these transactions - it just makes us better at our jobs.

Feel free to correct me if my assumptions about the need for witness' are incorrect opinions. Opinions are what the board is all about. That's my opinion

Reply by Sylvia_FL on 9/18/05 3:00pm
Msg #65935

On the "capacities". I always cross out husband and wife on the certificates (and single man" "single woman" etc) I do realize it is the software that puts the capacity on the certificate.
But it is after the docs go back that some companies are adding "husband and wife" etc., this is wrong! One company also added an AKA to the certificate - it has obviously been added on later as the handwriting is not mine!


On witnesses, if it was a lender requirement to have witnesses, then it would have been taken care of legally.
" If settlement/title company added witness who were not present at the table, did lender authorize it? Then the burden is on them"

Now, what about a notary that backdates, if the lender or title company authorized it, does that mean the burden is on them and the notary should be absolved of blame?

Wrong is wrong! Whether it is a "harmless wrong" or not. No-one has any authority to alter a notary certificate. And witnesses should not be added who were not present witnessing the signing. The harm is to the lender, the mortgage could be challenged, and when the witnesses are called into court to testify, how can they say under oath that they did witness the signers signing the document. The mortgage could be declared null and void.

I am still waiting to hear back from my friend in the Florida senate.

Reply by Barry Silver on 9/18/05 4:19pm
Msg #65955

Sylvia,

Let me know when you do. I will be filing some complaints as well. I looked up a few mortgages last night, and I found the husband & wife, added (obviously not my writing), some dates of the notarization were changed, but I think my favorite is that I looked up my own last two recorded mortgages. One of them has a notary and two witnesses, none of whom were at the signing; and one of them has a witness added who was not at the signing. All very interesting, isn't it?

Reply by Gerry_VT on 9/18/05 9:04pm
Msg #65971

Let me suggest yet another scenario (I'm not a lawyer, so this involves some
guesswork). Suppose our honest borrower goes bankrupt for reasons beyond
his control. The bankruptcy trustee sees it as his duty to attack any flaw in
the mortgage, (let's say homestead rules do not apply for some reason) so
that the house can be sold and the proceeds can be split among all the creditors,
not just the lender. The bankruptcy trustee finds out the title company was in
the habit of adding phoney witnesses, and establishes that did indeed happen
in our hypothetical case. The mortgage is nullified, and the lender has to share and
share alike with all the unsecured creditors.

Reply by Renee Kovacs on 9/19/05 4:41am
Msg #65986

**Note - not legal determination, just IMHO**

How would the borrower negate the fact that he did sign, and his signature was notarized? It would SEEM that the false witnesses would be an issue separate from the borrower's having executed the document. It would SEEM to be an issue of improper procedure against whomever added the false witnesses (and if it's recorded that way, it would seem to be the Settlement Agent or Title Agent, not the lender or the borrower).

Reply by Sylvia_FL on 9/19/05 7:13am
Msg #65989

Someone posted over on GMN that several years ago the Bankruptcy Court voided Ohio mortgages which were signed by witnesses who were not present.