Why Do Notary Loan Signing Agents Exist?

By Mark Wills - Course Instructor of the Loan Signing System and Forbes Real Estate Council Member

I'm always asked, “Mark, how come banks, escrow officers, or title companies do not simply do their own signings in-house and save the borrower the $150 signing fee? Why do notary signing agents even exist?”

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First and foremost, signing agents are notary publics and by law, a notary public cannot notarize a document in which they have a financial benefit. There has to be, what I call, a “Separation of Church and State.”

Seeing that the bank will be making thousands of dollars in interest on a mortgage, I think it is safe to say they have a financial interest in a mortgage being signed. It's for this reason that banks cannot notarize and sign their own loan documents. They need a neutral third party which is why they rely on escrow or title offices to find the notary signing agent. 

So, the natural next question is why don't escrow and title offices employ their own notary signing agents to save the borrowers a $150 fee? Or better yet, why wouldn't they hire a $15 an hour in-office notary, charge the borrower the $150 signing fee, and keep the difference as a markup or profit? 

The answer is that they need to keep themselves at arms length from fraudulent activity. 

Let's say an escrow office or title office had an employee notarize a deed of trust fraudulently because they were under pressure to close the loan. As an example, let's say that the person who signed the deed was not the person who appeared in front of the notary.

This fraudulent act by the notary could lead to damages for the borrower, the bank, the seller, or the buyer. Then all parties that were a victim of the notary's fraudulent act can sue the escrow or title company. If found guilty, the title or escrow company could potentially be out of thousands or millions of dollars in damages.

The way they prevent this scenario is by hiring a third party notary. 

So in this exact same scenario, if the fraudulent notary was a contracted third party independent signing agent, the escrow or title company are not held liable. They are at arms length from the loan signing.

This is why escrow and title companies will never have in-house signing agents and why our industry will always be around. They do not want to be held liable by a fraudulent notary that might be influenced to get an escrow transaction closed.

So now you understand why banks, title companies, and escrow companies hire third party notary loan signing agents.

But they can't just hire any notary public who has an active commission. They need to hire a notary public who has knowledge of the mortgage industry - a notary public who knows where a borrower needs to sign, date, and initial on all the loan documents. 

And now we come full circle.

A notary public who know loans documents is known as a notary loan signing agent.

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Now, some of you may be wondering, "Why can’t banks or escrow offices send out documents to be signed with e-signature, which in theory could eliminate a fraudulent notary AND act as a neutral third party?"

There are actually a few reasons why esignings don’t occur:

• First, the PATRIOT Act requires a verification of identity that is only possible in person.
• Secondly, as it stands today notarized documents cannot be digital in nearly every state. Even If notarizations did move to digital, the county recorder offices in every state in America would have to accept a digital copy of a notarized Deed of Trust or Mortgage. Recordable docs such as these will likely never go digital. They require a hard copy to be stamped and recorded.
• And lastly (and most importantly), the borrower still needs someone to walk them through the myriad of forms and documents so they aren’t confused as they sign.

At the most, if lenders went to eSignings it would have to be a mixture of electronic signatures and printed out loan docs, like a deed of trust or mortgage, that would require live signatures and ultimately still require a live notary signing agent.

So now you understand what a notary loan signing agent is and why they exist. 

And most importantly, you know why our industry will continue to stand the test of time. As long as there are homes, and as long as people get mortgages on those homes, there will be a need for notary loan signing agents. 

If you are interested in learning an in-demand skill that pays $75-$200 per hour-long appointment, take my Loan Signing System Course and Certification.

You’ll get immediate and unlimited access to the training videos, and my course comes with a money back guarantee.

Click the link below to learn how to become a notary public loan signing agent. I’m looking forward to helping you make more money and I’ll see you in class.
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