Posted by Hugh Nations Signing Agents of Austin on 5/10/07 5:51pm
Msg #189765

Ethical qusestion

My understanding of Texas law is that home equity loans may not be closed outside of the office of an attorney or a title company, or the office of the lender. My further understanding is that even an attorney cannot close an HE loan outside of the three venues listed, and if the loan is closed >>in<< one of those three venues, a signing agent can do it.

I was retained to close a loan in a borrower's home. During the closing, it became apparent this was a home equity loan, and thus the appropriate venue for the closing thus was limited. For other reasons, the borrower elected to abort.

Now I have been asked once again to close the loan in her home. I told the signing service I thought the signing was unlawful, and was told that the SS had posed that question to the lender (a well-known and aggressive bottom feeder), which said it was okay.

I might add that the lender apparently thought an attorney would be closing the loan, which is really academic because even an attorney could not do it lawfully in the borrower's home.

Question: Do I just proceed with the closing, since everyone else seems hell-bent to do so? Do I mention any concerns to the borrower? Do I opt out of the closing?

My responsibilities under the law are lrgely governed by notary law. There is nothing on the face of the documents to indicate invalidity, so as a notary, I should be okay. However, I am aware, as a signing agent, what venues are permissible for HE closings, though it is far outside the range of my duties to instruct the lender and the title company what would constitute a lawful closing, except as determined by notary law.

Reply by jba/fl on 5/10/07 6:01pm
Msg #189770

In these slow times there will be many temptations to stretch boundaries. I don't know TX law, and certainly cannot advise, but I do know when I can look myself in the mirror and know I had a good day staying within the boundaries I have set for myself, whether legal, moral or ethical. Know thyself, and be true to whatever belief system you subscribe.
My thoughts are with you for you to find your right answer.

Reply by Becca_FL on 5/10/07 6:04pm
Msg #189773

Hugh,

I'm surprised you would even post this question. You know what to do.

Yes, "My responsibilities under the law are lrgely governed by notary law." But, you should also follow the laws of the great State of Texas. I hear they're crazy about the death penalty out there...why chance it?

Reply by Dennis D Broadbooks on 5/10/07 6:07pm
Msg #189774

Placing Myself in Your Shoes...

...I personally wouldn't proceed if in my own mind I knew conclusively that doing so would be against the law.

Reply by AR_razormac on 5/10/07 6:33pm
Msg #189777

As it was stated to me in recent notary seminar held by the AR SOS "if you dont feel comfortable notarizing a document you can always tell them "There are 55,000 other notaries in the state perhaps one of them would sign it." Living on the Texas/Arkansas border I have reviewed Texas notary law as the company I work for notarizes in both states (to clarify for all you forum nazis the company, not me, offers notaries in both states I am strictly an Arkansas notary). HELCs are to be signed in one of the before mentioned venues.

Reply by MikeC/NY on 5/10/07 6:37pm
Msg #189780

Here's my 2 cents, FWIW.... if you know for sure what the law requires, the only thing you can do is to comply with the law. Doesn't matter what the lender thinks - you're the guy on the ground, and you may ultimately be held accountable.

If it was me in this situation, I'd take a pass.

Reply by Joe Ewing on 5/10/07 6:38pm
Msg #189781

Just my 2 cents Hugh. All the notary has to offer is his honesty and integrty. Your prior knowledge of the law is enough to prevent you from accepting or in this case compelling you to adjourn the signing. If the borrower cannot fullfill his obligation to the lender the mere fact that you (notary) closed the loan would IMHO void the transaction.

Reply by Sylvia_FL on 5/10/07 6:45pm
Msg #189785

Hugh, I am amazed that you, as an attorney, needs to ask this question. You know the answer!!!!

Reply by PL on 5/10/07 6:46pm
Msg #189787

Life is too long to spend it in court, defending your choice

The law is the law and you holding a JD would have a hard time saying I didn't know. So flip Darth Vader off your shoulder and tell him that today you are going to walk in the light and not on the dark side.

Reply by Hugh Nations Signing Agents of Austin on 5/10/07 7:40pm
Msg #189803

I think, since I indisputably had advance knowledge of the venue requirements for home equity loan closings, that my conduct could be considered fraudulent if I proceeded with the closing. That is separate and apart from any responsibilities imposed upon me as a notary. I was already attempting to arrange a closing in an attorney's office. At best, it would be negligence on my part to proceed.

It's encouraging that the responses to the question were unanimous in declaring that there are higher ethical planes to which we must aspire than those that just require us to follow notary law.

Reply by claudine osborne on 5/10/07 9:53pm
Msg #189813

Smart decision..good for you!

Reply by BrendaTx on 5/10/07 10:41pm
Msg #189818

**There is nothing on the face of the documents to indicate invalidity, so as a notary, I should be okay.**

That's disappointing to hear. I don't doubt what you are saying, but the lender must be breaking all kinds of laws--not just trying to get around the venue. It's the law (in my understanding) that attorneys licensed to practice in Texas must prepare these documents and are responsible for getting the language in them that is required. It's not been my experience to ever see a security instrument on a Texas Home Equity Loan of the type you describe without this (verbatim) right above the borrowers' signature lines.

>>BY SIGNING BELOW, Borrower accepts and agrees to the terms and covenants contained in this Security Instrument and in any Rider executed by Borrower and recorded with it.

[DO NOT SIGN IF THERE ARE BLANKS LEFT TO BE COMPLETED IN THIS DOCUMENT. THIS
DOCUMENT MUST BE EXECUTED AT THE OFFICE OF LENDER, AN ATTORNEY AT LAW OR
A TITLE COMPANY. YOU MUST RECEIVE A COPY OF THIS DOCUMENT AFTER YOU HAVE
SIGNED IT.]<<

__________________________
Borrower's Name


__________________________
Borrower's Name


Then, the Notary Acknowledgment follows. With those kinds of clear instructions on the document it's hard for a notary to ignore the requirement of the venue no matter how ridiculous it is that it is, in fact, a requirement.

Based on what you've said in this thread, I'd be tempted to dump the entire deal and let it become someone else's problem.

Reply by christiSocal on 5/10/07 10:53pm
Msg #189819

Tell 'em your're busy looking for a bass boat! ;) n/m

Reply by MelissaCT on 5/11/07 7:50am
Msg #189834

It's not only notary law that you must abide by

but also the laws of your state. Notary law says you can notarize a signature on just about any document, with certain exceptions (like birth certs, etc.) -- but there was recently a new article about a notary that notarized the signature on a document for the sale of a child (forgive my memory on this one). Clearly state laws have to be adhered to as well as notary laws.

Personally, I'd decline this request AND explain why.

Reply by Christine/NJ on 5/11/07 8:21am
Msg #189837

Re: It's not only notary law that you must abide by

I follow the old when in doubt...don't rule.

Reply by sue_pa on 5/11/07 9:38am
Msg #189845

what everyone else said and also equally important - wouldn't your bar assoc highly frown upon you breaking this rule/law? While I'm not a lawyer, I can't imagine wanting to get disbarred or sanctioned over a $?? fee over something that doesn't even appear to be a grey area.