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By DK King
Owner
The Power Funding Group LLC
Notary Choice Shouldn’t Be a Side Note
Referrals and repeat business can hinge on borrowers’ experience at the closing table
As the mortgage industry has changed, service-providers who support the business have had
to change, too. Escrow-settlement providers, for example, have introduced
new workflows to better assist borrowers. Mobile closings represent one
major change, and the right notary
public — one who’s specially trained
to make sure loan documents are properly signed and notarized — can make
all the difference for mortgage brokers
seeking quick and clean closings.
Once contracted, a mobile notary
can travel to borrowers’ home or other
meeting place at an appointed time and
facilitate a loan signing that might other wise be delayed because of schedule
conflicts or other holdups.
A reliable notary can have a huge
impact on a broker’s business. When
borrowers have an unpleasant loan-signing experience, for example, they
often aim their displeasure at their broker and not at the escrow personnel or
closing notary actually responsible for
the experience.
Here are a few things to keep in mind
when choosing a notary to sign your
loan transactions.
Professional and experienced
The notary with whom you work should
be attentive to every detail and socially
adroit and should provide excellent
customer service
An old saying in the escrow industry
notes that “you’re only as good as your
last deal.” For brokers, each deal that
leaves borrowers with a bad taste in
their mouths means dissatisfied clients
and lost referral business. Your choice
of a notary should help your business
grow, not work against it. When brokers
work with clients they never meet in
person, the impression left by a mobile
notary is even more important.
To find the best mobile notary in a
particular area, start by asking around.
Who is the notary making your colleagues and competition look good?
Once you get the names of a few
people, call them. A quick phone interview can help analyze people’s
professionalism and shed light on their
experience and knowledge.
Escrow agents often rely upon signing companies to provide screened notaries when needed. Signing companies
often maintain national databases of
free-agent notaries. The companies typically retain a portion of the notary fee
charged on the settlement statement for
the service of contracting notaries.
If you have a positive experience with
a good closing notary contracted through
a signing company, you might be able to
bypass the middleman and reward excellence by engaging that notary’s services
directly for your next closing. At the least,
you should be able to request that the
signing company assigns that specific
notary to your closings.
The National Notary Association
(NNA) also has a professional registry
of screened notaries trained to do loan
signings (see nationalnotary.org).
Screening and insurance
Fraud prevention is an industrywide priority. Closing notaries will have access
continued on page 36 »
to your borrowers’ personal financial
information when signing a loan package. Compliance with the Gramm-Leach-Bliley Act, designed to protect consumers’ financial privacy, means that brokers always want to make sure closing
notaries contracted to sign loan transactions have met the act’s safeguard standards with a background screening.
The NNA offers a nationally recognized
notary-background-screening service
that meets the safeguard standards.
Meanwhile, many title-insurance companies now require notaries who sign
DK King, based in Orange County, Calif., is a
licensed California broker and the owner of The
Power Funding Group LLC. She also is a commissioned notary public, writer and educator.
As a seasoned veteran of the mortgage-lending
industry, King has considerable experience in
commercial and residential origination, escrow
management, loan servicing, and bank-owned
asset management. King can be reached at
(714) 971-0933 or pfginquiry@sbcglobal.net.
These expanded definitions of “
financial institution” and “mortgage
lending business” will ensure that
private mortgage brokers and companies are held fully accountable under
federal fraud laws, particularly where
they are dealing in federally regulated
or federally insured mortgages.
« NE W LAW continued from page 28
The expansion of the financial-in-stitution definition will result in private mortgage-lending companies
being subject to stiff penalties for
committing fraud. It also will protect
those same companies from becoming victims of fraudulent conduct
that others commit.
“The new definition of financial institution
would subject mortgage-lending businesses
to enhanced penalties.”
Expanding the term “financial institution” to include “mortgage lending
business” also will subject public and
private mortgage companies to more-severe penalties for mortgage fraud,
as well as civil forfeiture in mortgage-fraud cases.
The new definition of financial institution also would subject mortgage-lending businesses to enhanced
penalties for mail and wire fraud conducted by a financial institution. By including mortgage-lending businesses
under the federal criminal code, FERA
also extends the statute of limitations
for investigation of mortgage-fraud
cases to 10 years, consistent with bank-fraud investigations.
False statements
Fraud in the mortgage market has involved borrowers, lenders, brokers,
appraisers and other parties. FERA
amends the “false statements” provision in the mortgage-application
provision of the federal criminal code
to include false statements by mortgage brokers and agents of mortgage-lending businesses. By amending this
portion of the statute, FERA prohibits
employees and agents of a mortgage-lending business from making a materially false statement in a mortgage
application or willfully overvaluing a
property to influence any action. Previously, this section of the criminal
code applied only to federal agencies,
banks and credit associations. It did
not include private mortgage-lending
businesses.
FERA also expands the mortgage-application provision of the federal
criminal code to make it a crime for
mortgage brokers and agents of mortgage-lending businesses to make false
statements in applications to lenders
that aren’t federally regulated.
Similarly, the expansion of the application of the false-statement provision also would ensure that private
mortgage brokers and companies are
held fully accountable under the federal fraud provision. This is particularly
important as it relates specifically to
false-appraisal fraud, which has been
an especially problematic type of mortgage fraud of late. Under this provision,
private mortgage brokers who make
false statements in mortgage applications will be subject to penalties of imprisonment or fines or both.
A portion of this money will go specifically to the investigation of mortgage
fraud. The funding will be allocated
among the FBI, several offices of the
U.S. attorneys and several divisions of
the Department of Justice.
The funds appropriated under this
section will be limited to covering the
costs of each listed agency or department for investigating possible criminal, civil or administrative violations.
Additional funding
FERA authorizes the U.S. attorney general as much as $165 million annually
in fiscal years 2010 and 2011 for investigation and prosecution in civil and administrative proceedings for fraudulent
action involving federal assistance programs and financial institutions, including financial institutions to which FERA
and amendments made by FERA apply.
Inquiry commission
FERA also authorized the legislature
to establish a Financial Crisis Inquiry
Commission to combat mortgage fraud.
The commission formed recently and
launched its investigation this past
September. One of the commission’s
functions is to examine the domestic
causes of the economic crisis and to
determine the role of fraud in the financial sector, including fraud committed
by mortgage brokers. The commission
also will investigate the role of lending
practices and securitization, including
the originate-to-distribute model for
extending credit and transferring risk.
Ultimately, FERA should help improve
the financial climate and assist in removing and prosecuting fraudulent brokers from the mortgage market. Brokers
who remain in business should uphold
the highest standards and avoid even
the appearance of possible fraud. •
