Posted by GOLDGIRL/CA on 2/2/11 10:33pm
Msg #371245

What the notary don't tell you ....

The following is a reader response to California's recent settlement with Countrywide for a few million $$ over their predatory lending practices:

<<what the loan person and the notary dont tell you about the hidden aspects of your loan when they go over it with you some people including myself didnt realize it was an a.r.m loan untill it was to late. i was told my interest rate which was ok and found out much later it was an a.r.m loan, something i had never been in ever before and when i found out to much time had past and i was stuck like many others with the loan. you people dont know that people were lied to and signed loans they did not and were not told were a.r.m loan untill it was too late>>

Notice how this bonehead borrower thinks it's the notary's job to spell out the loan terms? Yikes! I start every job with "I'll be explaining each page you sign .... blah blah blah, but I do NOT work for your lender, I know nothing about your loan terms (even tho any dummy can clearly read them), so don't even ask, call your LO, etc etc." Wonder how many borrowers actually think we are licensed by our state(s) to explain loan terms??

Reply by Cari on 2/2/11 10:45pm
Msg #371248

doesn't surprise me that this person would say this...by the

time we introduce ourselves, explain what our roles are as signing agents, go over each document with a short briefing, have BO sign, then we sign and notarize...at the end, I'm sure they would've forgotten all about our little intro as to what our roles were in the transaction...

But now that you mentioned this, it did get me thinking...and maybe it has been discussed here before, and/or I just haven't read it, but perhaps we can give the borrowers some sort of disclosure at the beginning (or ending or both) of the closing, to let them know what our job or roles is as the signing agent?

Any thoughts?

Reply by GOLDGIRL/CA on 2/2/11 10:57pm
Msg #371254

Re: doesn't surprise me that this person would say this...by the

When I first became a notary, I took a loan signing class, and the teacher had this quarter-page sheet where she listed 3 or 4 things that went something like this:

1. I an not a licensed loan officer and cannot ... blah blah blah.
2, I am not an accountant or an attorney and cannot ...blah blah blah
3. I am a a notary and will administer an oath to you wherein your promise ... blah blah blah, and make sure you sign everything in the right place and notarize your signatures.

And then there was a line for the borrowers to sign all this. Not knowing any better, I spent the first year as a loan signer using this .... but long ago dropped it. That's a good point you made about borrowers forgetting who the heck we are by the time the loan is signed. I'm not sure what would work that would make them remember .... except maybe hearing me say 16 times to call your LO cos I don't know why there's a $3,000 origination fee ....

Reply by kathy/ca on 2/2/11 11:50pm
Msg #371278

Goldgirl, why did you stop using the above form? Seems like

it was a good use of CYA!

Reply by BrendaTx on 2/3/11 8:44am
Msg #371324

kathy/ca - You can go back and re-read this thread

to refresh your memory if she doesn't give you yet another answer to this nagging question of yours about CYA and holding harmless the notary.

Msg #341361

Reply by parkerc/ME on 2/3/11 11:57am
Msg #371363

The back of my business card contains my brief "disclaimer"

Very first thing, I hand them my business card and flip it over and point out to them my disclaimer statement on it, and then I give them a more lengthy explanation of my disclaimer statement.

Reply by MarieG/CA on 2/3/11 12:58pm
Msg #371384

Re: The back of my business card contains my brief "disclaimer"

I think this is a brilliant idea!

I might just steal that

Reply by Marian_in_CA on 2/2/11 10:51pm
Msg #371251

I do much the same, except I usually review the big points on the TIL and HUD. Maybe the new format forms make it easier... but I always point these out since that usually covers the majority of questions people have. I always tell them that I did not prepare the forms and cannot comment on them, but I do point out where to find it the information.

This person is pretty much an idiot to blame the notary and the loan officer for not knowing that their loan rate was adjustable instead of fixed. They signed the paperwork! I mean the bottom of the TIL couldn't be more idiot-proof, could it?

Reply by doglover/CA on 2/3/11 12:08am
Msg #371280

Tonight I had a borrower ask if her loan was fixed. I pointed out that page 3 of the HUD and the TIL both indicated it was fixed, and also if it were an ARM, there would be a disclosure included for the borrower(s) to sign indicating they understand how an ARM works and that the Note for an ARM loan is longer than the regular fixed rate Note.

Reply by SheilaSJCA on 2/3/11 9:25pm
Msg #371524

Plus if it is an ARM, the note has to say it at the top of the first page in big bold font: ADJUSTABLE RATE NOTE.

Reply by JanetK_CA on 2/4/11 3:19pm
Msg #371607

And then there's the ones that said "Fixed Adjustable Rate Note" or something like that. (You know, the 5/1 notes, for example.) I remember running into a few people with those notes who thought their loan was "fixed" - yeah, fixed for five years, then it started to adjust, some monthly. The LO told them not to worry about it...

The few I've seen recently are fixed for x years, then adjust annually, and so far, fortunately, they've been with people who are planning to move within that time period or are financially savvy and understand what they're getting into.

But the title at the top of the page is one of the things that I point out to the borrowers, so they know exactly what kind of note they have. If it's an ARM, I also point out the change dates, caps, margin, index... That I can control, but I can't control how well a person pays attention or absorbs what we review. But they are left with a copy of it, so if they're not sure, all they have to do is read it again. (Like that ever happens! )

Reply by roxierox/TX on 2/2/11 11:06pm
Msg #371263

People have to blame someone.

Reply by MichiganAl on 2/3/11 2:03am
Msg #371285

Well golly, I didn't see that in big bold letters on top of the note that I signed it said ADJUSTABLE RATE NOTE. I also didn't see the mortgage rider that I signed that said ADJUSTABLE RATE RIDER. I didn't see the adjustable rate disclosure even though, yes, that's my signature. I didn't understand the Governments own Truth in Lending form that showed a payment projection either. Nope, everyone including the notary just snuck those by me.

Two things come to mind:

1. Some people just never take responsibility for themselves. It's always someone else's fault.
2. You just can't save stupid people from themselves.

Reply by Mary Ellen Elmore on 2/3/11 1:42pm
Msg #371393

I have a friend with a great credit rating (above 650) and she just bought a house. She got an ARM because the RE Agent told her, 'I have one and it has gone down every year for the past 4." and "You really only save a few dollars a year with a fixed rate."

I don't believe it but the starting rate was 3% so she took it thinking if need be she would re-fi in a few years if need be.

Reply by JanetK_CA on 2/3/11 3:15pm
Msg #371430

Lots of people were told that during the refi-mania. Then their property values dropped or they lost their job. Whenever interest rates start going up again, that is going to be a huge problem for a lot of people - especially those who are underwater or maybe still out of work - who won't be able to re-qualify for a new loan.

Also, I read something this week that said that ARMs may be coming back, with some changes to make them less risky and more attractive to some borrowers. But I guess it's like any other loan, it needs to be matched with the right borrower, right circumstances.

BTW, that's not my area of expertise, but I don't consider a 650 credit score great. Over 750, probably. I don't see very many under 700, but that could be because those borrowers don't mention what their scores are... (I don't usually look at their personal data if I don't need to.)

Reply by MichiganAl on 2/3/11 7:56pm
Msg #371514

Oh, they're back

I had an ARM AND a Balloon today. Both were doctors. The borrowers understood it perfectly.

Reply by Julie/MI on 2/3/11 6:03am
Msg #371289

Maybe we should go back to having title companies close loans. When I close a loan, the signer knows what they are getting, and if it's an ARM or balloon. Personal responsibility is the key. mama mia!

Reply by BrendaTx on 2/3/11 6:40am
Msg #371290

Agree, Julie.

In a title company, there will not be a speech at the beginning of the closing to indicate that the tc or the notary for the tc is absolved of all necessity of knowing things about the loan. However, a tc only knows what is on the closing instructions. They following the instructions and they put those on the hud and if closing costs strike the borrowers as a problem, the borrowers still questions the lender, not the tc, to get the answer.

I don't feel like it is beneficial to me to tell people at the beginning of the signing appointment that I am just their notary and what I do not know or what I will not be able to tell them. They figure it out if they ask questions that only the lender can handle. Most of the "Why is this $B when the lender told me it would be $B?" I can't answer. But, almost always can answer "what is..." I can add, I can substract, I can do multiplication and division. I can find the answers to most questions in the documents, or their GFE, but I don't feel the need to make them aware of "If there is a problem, I can't help you." because I usually can.

It would be helpful for all notary signing agents to spend time closing in a title company or watching closers in a title company.

ARM, balloon, or regular straight loan terms is obviously there in bold type.

Reply by Linda_H/FL on 2/3/11 7:02am
Msg #371291

Re: Agree, Julie.

I don't have a pre-signing speech either - other than "I need to see your original photo ID" and "I'll be going through the documents you'll be signing - if you have any questions just stop me and we'll get your answer or get your LO on the phone...okay? Good...here we go"..

To me, any pre-signing "warning" speech limiting yourself might only put questions in the signer's minds and make them insecure in your ability to help them.

BTW, I too go over all the docs with terms - so signers do know if it's fixed, adjustable, when first changes occur - and no it's not UPL...it's in black and white in the note and rider.

MHO

Reply by jba/fl on 2/3/11 7:56am
Msg #371308

Re: Agree, Julie.

My pre-signing speech is confined to ID, put all your pens out of reach as I have some for everyone, we are signing in blue, did your LO go over the Hud with you, then page 3 of the Hud is on the table with me reading terms from the bottom and asking: Is this what you are expecting? I need your check, cashier's check, etc if indicated.

I want cheerful, nodding heads, nothing negative in the way of a quick signing.

Reply by ReneeK_MI on 2/3/11 8:23am
Msg #371314

Re: Agree with Julie & the others

IMO, anyone who markets themselves as a LOAN signing agent, or a mobile closer, who does NOT present the terms of the loan to the borrower is misrepresenting themselves and doing everyone a disservice.

As those before me, I don't preface the closing w/any 'disclaimers' either as I see nothing beneficial to that. IF/when I'm asked a question I can't answer, THEN I can explain why I can't and find them the right person who can.

I do have one thing I might do differently than others - I don't go over the terms of the loan using the HUD's disclosure of them. My reason is this - the Note is the binding contract, the HUD is merely a disclosure. If there's a discrepancy, the Note trumps all, not the HUD. I'd rather not deal with the headache of a discrepancy, nor do I want to go over the terms twice.

With the Note, I point out EVERY item of the terms - loan amount, interest rate, first pymt/end date, P&I, grace period & late pymt rate, any change dates, rate of change, ceiling rate, ALL of it. I also point out specifically whether it's fixed or adj or whatever (it's all printed right there in black and white).

There is no way anyone I've ever signed/closed could pull off the "I didn't know ..." game.

Reply by Linda_H/FL on 2/3/11 8:30am
Msg #371318

Ditto Renee

"With the Note, I point out EVERY item of the terms - loan amount, interest rate, first pymt/end date, P&I, grace period & late pymt rate, any change dates, rate of change, ceiling rate, ALL of it. I also point out specifically whether it's fixed or adj or whatever (it's all printed right there in black and white"

Reply by Dorothy_MI on 2/3/11 10:39am
Msg #371340

That's what I do too n/m

Reply by MichiganAl on 2/3/11 11:58am
Msg #371365

Yep to Brenda, Linda, Renee, Dorothy, Julianne, Marilynn n/m

Reply by BrendaTx on 2/3/11 2:33pm
Msg #371410

I can't wait...I'm first, right?

What???

Oh...you just meant that you agreed with us. Oh...ok then.

Reply by JanetK_CA on 2/3/11 3:55pm
Msg #371462

I agree, too.

And I also go over the Note - as described - not page 3 of the HUD. I do have a short spiel at the beginning, but it's mostly about signing procedure (sign name as typed, etc.). I also mention that I'm not an attorney, so I can't interpret or give advice, but that answers to their questions are usually in the docs, so don't hesitate to ask. Once in a rare while I'll get an executive type who just wants to look over the docs on his/her own without any help, so I go along with what they want. But those aren't the types who are likely to say they didn't know it was an ARM. These are generally borrowers who know exactly what they're getting.

Reply by Belinda/CA on 4/20/11 11:02pm
Msg #380777

Re: Agree, Julie.

Cheerful nodding heads. I like that picture.

Reply by dlcva on 2/3/11 9:25am
Msg #371331

Re: Agree, Julie.

I agree with Julie, it is are job to show them its a arm and to show what it says about that in the package, you can't just go in and say sign here. I answer what I can by what the docs show, anything above that I make a call for the borrower to loan officer or tc. We do get paid to go over the docs with the borrower. If you don't understand that or do it, then you shouldn't be doing loan closings.

Reply by MW/VA on 2/3/11 8:32am
Msg #371319

This tactic as well as issues with the RTC have been used by attorneys as "legal loopholes".
Because of all the press, I've had many borrowers anxious that they were getting hustled into an ARM.
Whether it is is my job or not, I always point out on the Note whether it is an ARM or not. Believe it or not, some streamline VA loans are ARM's. It's not my decision to make what kind of loan people are getting into, only that the "willingness & awareness" aspect of my job is covered. If I'm ever pulled into court I can assure you that no one will ever be able to say they didn't know what they were signing.

Reply by dlcva on 2/3/11 9:29am
Msg #371332

you are right marylyn

I know about going to court, I have to for a reverse I did over to years ago. But I know I did my job and that everything I did was right. Because the person who trained me showed me how and made sure I understood that you need to make sure they understand the docs. Thank you to that person.

Reply by GOLDGIRL/CA on 2/3/11 12:13pm
Msg #371374

To: kathy/ca

I stopped using that form because after a while I thought it was unnecessary and excessive. Besides, I didn't see that it would do any good even if some borrower said the notary mislead them or "hid" stuff. It was replaced by my ever-morphing doc presentation style, which at this point is pretty much like everybody elses who posted. I have the HUD, note, TIL, first payment letter and RTC on top. Starting with the HUD, I tell them these are the loan costs, what they owe/get back. Then on to the note: here's what you're borrowing, your interest rate, first payment, when it's due ... and on and on. This takes about a minute or two and then we're good to go or they've got their LO on the phone. Sometimes even this can be avoided by scanning the HUD for items they either didn't know about or had forgotten.

Frankly, I don't know of anything more we can do to cover ourselves. I think that focusing on what is actually in front of the borrowers (the loan docs) instead of starting out by saying a whole bunch of things about who we are not and what we can't do works alot better, so I junked the form - informative as it was. Besides, as Cari said, borrowers forget everything anyway - but remember what is convenient.

Reply by MW/VA on 2/3/11 2:40pm
Msg #371415

You're welcome, Debbie. :) n/m

Reply by jnew on 2/3/11 12:55pm
Msg #371382

I don't give a card to the borrowers so I have a cover sheet with my business information. I have this language on my cover sheet which I attach to the borrowers copies.

" I am a notary public / loan signing agent. I provide this service as an independent contractor and am not an employee of the lender or settlement company. I do not provide borrowers with any advice with regard to the transaction. My services are limited to presenting the documents to the borrowers, notarizing any documents which require such and assuring that the borrowers sign the documents correctly. Please consult the lender for answers concerning any questions you may have with regard to the terms of your loan"

I came up with this myself and it may not be the best spiel, but I think it might give the borrowers enough information so they don't make idiotic comments about what the notary did or did not tell them at signing.

Reply by Mary Ellen Elmore on 2/3/11 1:16pm
Msg #371386

I can not believe how mis-informed people are.

I have never seen an ARM that the papers did not say it was an ARM.

I have started pointing to the terms on the TIL though. I also emphasize that, "you might want to really read these pages." and have the criticals on top RTC, TIL, Itemization, etc.

Most people will ask me the questions these papers answer up front front, but I am still so surprised that so many BO's never even glance at their paperwork, they just sign.

Some will start looking a bit more closely when I swear them in because the oath I was taught to give says, in part, "Have you read or had read to you the documents you are about to sign?"

I also have them sign that I gave the oath and have the complete oath typed out.