Posted by Leon_CO on 2/14/08 7:28am
Msg #235237
Understanding the loan documents
I read an article this morning on InmanNews, written by Ilyce Glink, entitled: 'Don't make this mistake when refinancing'. She gave some very good advice in saying that, no one should ever sign their name to a legal document without understanding exactly what the document says, and what the transaction is all about.
As a notary signing agent, I see it firsthand: borrowers are so anxious to get the signing over with, or they're so distracted, that they don't take the time to read what they're signing. And very few of them ask questions. If they do ask questions, they are usually not the right types of questions to ask. She suggested to borrowers: "If you don't understand what is on the page, then keep asking questions until you do understand."
I agree.
Reading every single word, of every single document, could make for some very long closings. I, for one, am not in favor of sitting through a closing if a borrower wants to take the time to read over 100 pages of loan documents, and try to decipher the meaning of every word they don't understand.
Nevertheless, I think that borrowers should take more time in understanding what it is they are signing. Even though they have a 3-day right to cancel, in most cases, I would venture to say that, very few of them actually take the time to read every single page of their copies.
A few days ago I wrote an article: 'Deed of Trust: 'Does anybody really read all of this?'', in which I suggested that borrowers take the time to read this very important document. I dissected parts of the Deed of Trust and pointed out things they should look for. I have also written articles on other loan documents that the borrowers will encounter.
Which brings me to notary signing agents, and the role that we can and should play. There is a very strong mandate for notary signing agents to become very knowledgeable about all of the loan documents. Borrowers are becoming more and more skeptical (and savvy) as a result of the subprime fiasco, and they will want more time to read and understand what they are signing. And, if they take the advice of Ilyce Glink, they will ask more questions.
No, notary signing agents should never give legal advice. But there are nevertheless very many questions that we should be able to answer. There are many ways in which we can divert a potential no-sign into a smooth and successful closing. It is imperative for us to become as highly skilled as possible.
It will be a challenge. But I believe that notary signing agents are up to it.
Good luck.
| Reply by Julie Williams on 2/14/08 8:23am
Msg #235241
You are going to turn us into attorney only with that line of thought, I'm afraid.
Of that entire stack of documents, the note is the one and only mighty document that the borrower needs to know. The rest are CYA for the lender and title company.
I agree, that the borrower needs to understand what a balloon note is or interest only, but for a standard, fixed fully amortized note, it REALLY is plain and simple.
Even an adjustable note, isn't that difficult.
Deeds of trust and mortgages have some clauses that are "boilerplate" and standard for the state the property is located in.
| Reply by Julie/MI on 2/14/08 8:26am
Msg #235242
Darn I accidentally hit enter....I wasn't finished....
Most important:
The borrower has the right to engage their own attorney to be present at the closing or during the recission period.
The notary should begin with the note and show the important terms, but we should not be the mortgage police.
| Reply by Leon_CO on 2/14/08 8:33am
Msg #235243
Re: Darn I accidentally hit enter....I wasn't finished....
>> we should not be the mortgage police. <<
Julie, I think you're reading far too much into what I'm saying.
The only thing that I am suggesting is that we are in a position to answer any questions the borrowers ask, if we are at liberty to answer them. And if we aren't, then we refer them to their loan officer, as we have always done.
There is no fear of mortgage loan closings becoming 'attorney only' if notary signing agents are capable of handling the closings themselves.
The real fear is if notary signing agents are NOT able to handle them.
Good luck.
| Reply by sue_pa on 2/14/08 8:42am
Msg #235244
Re: Darn I accidentally hit enter....I wasn't finished....
I think the generalized fear, at least for me, is that people who don't even know what a venue is will attempt to 'explain' 150 pages of documents to homeowners. We see it often enough - new people that take 2 or 3 hours to get a regular package signed. Synopsizing legal documents is as much practicing law as interpreting those documents. It's a very fine line we walk.
| Reply by Leon_CO on 2/14/08 9:15am
Msg #235248
clarification
>> We see it often enough - new people that take 2 or 3 hours to get a regular package signed. <<
Two nights ago I had a closing in which the borrower told me that the first time she refinanced, the notary signing agent took 3 1/2 hours. Too long, definitely.
I received an email this morning from someone, and I thought it best to give some clarification about this post. My response to her was this:
>> (friend's name), I have a very simple philosophy that will explain that post: 'Walk tall and carry a big stick.' It doesn't mean that you have to use the stick. But it's there if you need it.
I don't advocate getting involved in giving advice with regards to loan documents. I just believe that notary signing agents can benefit from as much training and knowledge as possible. <<
--------------------------------------------
My approach is actually very simple:
1) Present the document and explain what it is.
2) Keep my mouth shut. (smile  )
3) Go to the next document. (repeat)
4) Leave.
Only if the borrowers ask questions, or want more time to read the documents, does it deviate from that.
My job is not to teach Real Estate Law. My job is to get documents signed, sealed, and delivered.
It works out pretty well, as long as I accept that.
Good luck.
| Reply by Cari on 2/14/08 9:21am
Msg #235250
....as a paralegal in the real estate biz for 20 yrs....
I always advise the BO to take their time and read read read, and what they don't understand, I try to explain so they can at least think they understand.
Of course, I do not give out legal advice, and tell them this also upfront, and if their questions involve figures, I automatically refer them to call the LO at the table.
| Reply by Dennis D Broadbooks on 2/14/08 9:25am
Msg #235253
Being Intentionally "Silent"...
...can be one of the best attitudes to adopt in this business. As you say, Sue, it's a VERY fine line we walk. I want to know "enough" about the documents to not be ignorant, but never "too much" to start blabbering in areas I have no business discussing. One of the protections I use to cover myself from ever being accused of UPL is a "document signing arrangement" form I use at the start of every signing appointment. The form was created at the urging of & in harmony with my attorney. The gist of the document says who I am, what I do, & more specifically what I DON'T do. One of the "DON'T's" is I will not comment on the financial specifics of the documents themselves. If the borrowers start asking how their loan amounts/fees/charges were calculated I immediately tell them that's a question they need to ask their loan officer.
| Reply by Pat/IL on 2/14/08 10:02am
Msg #235258
Re: Good Comments
There are excellent nuggets of wisdom in all of the above posts. One thing I might add, in addition to the NSA knowing the documents, is knowing the overall process. If I understand the function of each participant in the transaction, I will then know to whom I should direct the borrowers' questions.
An aside: Leon, I read your post on Active Rain, you did a nice job on it. I am just curious about your example of the DOT. I thought it was pretty much universal that it would state the name of the trustee, and not necessarily the lender (I have seen the lender included in some, omitted in others). Does Colorado follow a different format?
| Reply by sn/oh on 2/14/08 12:47pm
Msg #235283
The other evening, my client had a question about what an open end mortgage was. Now I know what it is but I encouraged him to call the loan officer before he signed anything to get an understanding. I asked him if he had a home equity line of credit (which is where I usually see these Open End Mortgages) and he said no. I thought it best, at the time, to have him call loan officer, which he did not do while I was there. Rather than to tell him what an open end is, I just explained what was in the mortgage papers. To me, I only answer questions that can be found in the papers being explained. That way I can clearly determine the "Fine Line". It seems to me that the LO should do a better job in explaining those docs that are very important to understand to the brwr.
| Reply by Pat/IL on 2/14/08 1:16pm
Msg #235290
I would have told the borrower what an open ended mortgage is. I would have no more concern in letting them know this as I would in telling them what a house is.
If the borrower has questions specific to their particular open ended mortgage, I would refer them to their loan officer, as would most everybody.
If this sounds snarky, it is not my intent. Just trying to draw a comparison to demonstrate my personal opinion. I think some of the discussion on message boards has instilled excessive fear of, rather than a healthy respect for, boundaries of UPL. Knowing your boundaries is a good thing. Help the borrowers find their answers in the appropriate way. Sometimes that answer can come from the NSA, sometimes from the LO, sometimes from the title employee, sometimes from the lender.
Disclaimer: This is message board banter, not legal advice (See? Even this silly disclaimer should be unnecessary. Yet my irrational fear that I will get sued for bad information causes me to waste my time typing it and your time reading it.)
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