NSA - Notary Signing Agent Loan Documents and Procedures Questions and Answers 1 — Questions and Answers
Question 1: During a loan signing, the borrower asks for your opinion on whether the interest rate on their Promissory Note is competitive. What is the appropriate action for the Notary Signing Agent to take?
- Provide a general overview of current market rates without giving a direct opinion.
- Advise the borrower that you are prohibited from offering any opinions or advice and suggest they contact their lender. (Correct answer)
- Explain that the rate seems fair for their type of loan.
- Refuse to continue with the signing until the borrower confirms their satisfaction with the rate.
Correct answer: Advise the borrower that you are prohibited from offering any opinions or advice and suggest they contact their lender.
A Notary Signing Agent's role is to witness signatures and ensure documents are executed correctly. Providing an opinion on loan terms, such as the interest rate, would constitute giving financial advice, which NSAs are strictly prohibited from doing. The correct procedure is to refer the borrower back to their lender or loan officer for any questions related to the terms of the loan.
Question 2: A borrower in a refinance transaction is signing the Notice of Right to Cancel. Which of the following is the MOST critical procedural step for the Notary Signing Agent regarding this document?
- Ensuring the document is signed and dated by the borrower.
- Making sure the rescission period dates are filled in correctly and providing the borrower with two copies. (Correct answer)
- Notarizing the borrower's signature on the document.
- Explaining the financial implications of canceling the loan.
Correct answer: Making sure the rescission period dates are filled in correctly and providing the borrower with two copies.
The Notice of Right to Cancel is a crucial document in many refinance transactions, granting the borrower a three-day period to cancel the loan. The Notary Signing Agent must ensure the form is properly dated to reflect the start of this rescission period and must provide each borrower with two completed copies. This procedure is a strict requirement under federal law (TILA).
Question 3: While reviewing a loan package before an appointment, a Notary Signing Agent notices the Deed of Trust contains a pre-printed notarial certificate from a state other than where the signing will occur. What should the NSA do?
- Refuse the assignment because the documents are incorrect.
- Cross out the out-of-state certificate and attach a loose certificate that complies with the signing state's laws. (Correct answer)
- Use the pre-printed certificate as is, since it's part of the lender's official document.
- Contact the borrower to see if they are comfortable signing with the out-of-state certificate.
Correct answer: Cross out the out-of-state certificate and attach a loose certificate that complies with the signing state's laws.
Notarial acts must comply with the laws of the state where the notarization takes place. If a document has a pre-printed certificate from another state, the NSA must replace it by crossing out the incorrect certificate and attaching a loose certificate that is compliant with their own state's notarial laws.
Question 4: Which of the following documents in a typical loan package is the borrower's promise to repay the loan and is NOT notarized?
- Deed of Trust
- Occupancy Affidavit
- Signature/Name Affidavit
- Promissory Note (Correct answer)
Correct answer: Promissory Note
The Promissory Note (or Note) is the legal document that contains the borrower's promise to repay the loan according to the agreed-upon terms. While it is a critical document that must be signed, it does not require notarization. The Deed of Trust, Occupancy Affidavit, and Signature Affidavit all typically require notarization.
Question 5: A Notary Signing Agent is at a signing where the borrower's name on their driver's license is 'James A. Smith,' but the loan documents list the name as 'James Allen Smith.' What is the best course of action?
- Proceed with the signing as the names are substantially similar.
- Have the borrower sign as 'James Allen Smith' and make a note in the journal.
- Immediately stop the signing and contact the contracting company for instructions. (Correct answer)
- Ask the borrower to provide a second form of ID that shows their middle name.
Correct answer: Immediately stop the signing and contact the contracting company for instructions.
Discrepancies between the name on the ID and the name on the loan documents can cause funding delays or rejection of the documents. The NSA should not make a judgment call. The proper procedure is to contact the title company or lender immediately for instructions on how to proceed. They may approve the signing or require a correction to the documents.
Question 6: When presenting documents during a loan signing, the Notary Signing Agent should:
- Read each document aloud to the borrower to ensure they understand everything.
- Only point to the signature lines without saying anything to avoid giving legal advice.
- Name the document, state its general purpose, and point to where signatures, dates, or initials are required. (Correct answer)
- Summarize the legal consequences of each document for the borrower.
Correct answer: Name the document, state its general purpose, and point to where signatures, dates, or initials are required.
The Notary Signing Agent Code of Conduct allows and expects NSAs to present each document by naming it and briefly stating its general purpose (e.g., 'This is the Promissory Note, which is your promise to repay the loan.'). This guides the signer without interpreting the document or providing legal advice. The NSA must then indicate all places for signature, initials, or dates.
NSA - Notary Signing Agent Loan Documents and Procedures Questions and Answers 1
During a loan signing, the borrower asks for your opinion on whether the interest rate on their Promissory Note is competitive.
What is the appropriate action for the Notary Signing Agent to take?