Magazine article Mortgage Banking

New Standard for Notaries

Magazine article Mortgage Banking

New Standard for Notaries

Article excerpt

The decline of the housing market and other industry challenges prompted the federal government to significantly increase its scrutiny of the mortgage finance industry. This stepped-up oversight is perhaps nowhere more evident than in the actions of the two-year-old Consumer Financial Protection Bureau (CFPB). The challenging environment has motivated lenders to take a hard look at how mortgages are originated _ and adopt new strategies for overseeing their third-party service providers. Of all the people involved in originating mortgages, notary signing agents--the independent contractors who conduct mortgage signings--received little attention. Yet that is changing. In order to comply with federal mandates, lenders now recognize that the tens of thousands 5 ARAH HOL LANDER of signing agents who represent them at the signing table need to be better qualified. Many lenders also are realizing that more often than not, signing agents are the only actual face borrowers see, and how they perform their duties directly reflects on the lender.

Organizing a response

As a result, a special committee called the Signing Professionals Workgroup (SPW), comprised of executives from more than a dozen major lenders and title companies (including Bank of America, JPMorgan Chase, Wells Fargo, CitiMortgage, U.S. Bank, Title Source Inc., LSI Corporation and First American Mortgage Services)--with the National Notary Association (NNA) serving as adviser--met throughout 2013 to create the first set of recommended best-practice standards for notaries handling loan signings.

These standards are called the Certified Signing Specialist Standards and they form the basis of a new designation for signing professionals: the Certified Signing SpecialistTM. An

Traditionally, lenders, title companies and settlement services companies came up with their own guidelines for hiring signing agents. This led to a wide disparity in qualifications and often forced signing agents to meet redundant requirements.

"The standards and new certification designation are intended to provide a set of qualifications and practices for everyone concerned with what happens at the signing table while helping to reduce inconsistencies," says National Notary Association President and Chief Executive Officer Thomas Heymann. The SPW anticipates implementing the standards in the second quarter of 2014 as an industry standard best practice.

One of the more important considerations of the SPW, and a key focus of many of the regulatory initiatives, was improving how lenders and title companies interact with borrowers.

"The banks and title companies depend on the professionalism and competency of the person at the signing table," says Cristy Ward, chief strategy officer for Moon Township, Pennsylvania-based Mortgage Connect and a Signing Professionals Workgroup participant.

"Upholding the recommended standards assures a consistent closing experience for all of the parties involved in the transaction," she says.

The standards explained

The standards are broken down into five distinct categories:

* The Certified Signing Specialist Code of Conduct;

* Standardized signing script;

* Annual background screening;

* Annual examination; and

* Notary errors-and-omissions insurance.

The Certified Signing Specialist Code of Conduct

At the heart of the standards is the Certified Signing Specialist Code of Conduct. The code of conduct is divided into 10 guiding principles encompassing more than 100 individual standards of practice. They cover everything from protecting signers' privacy and acting in a professional manner to not providing unauthorized advice or services and reporting illegal or suspicious activity.

In order to receive and maintain the designation of Certified Signing Specialist, notaries will be required to sign an acknowledgment stating that they will abide by its standards. …

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