'Robo-Signing' Guilty Plea Sends Strong Message To Mortgage Servicing Industry
The mortgage servicing industry got a powerful message recently when the former president of DocX, the now-defunct company at the heart of the “robo-signing” scandal, pled guilty to federal and state criminal charges.
“Far beyond the issue of integrity in the execution of ‘robo-signed’ documents, employers in general must take a good look at their operational risk in light of the details of the conviction of this executive,” said Chrissey Ladd, a long-time Notary compliance expert and educator for financial institutions and the NNA 2011 Notary of the Year.
“A culture of compliance flows from top management,” said Ray Callahan, a long-time risk compliance executive at a number of financial institutions. “No one person created a million fraudulent documents. Violations would have started with the wrong tone at the top and a companywide lack of knowledge and respect for laws, rules, and regulations that cover document signing and notarization.”
Ladd agreed: “A strong educational and supervisory program is a must for all those in the document signing industry, and it is the responsibility of employers to take the lead and implement policies and procedures to protect consumers.”
The case also signals that government regulators will hold companies and their executives accountable for widespread practices and policies that violate the law regarding document signing and notarization practices. Lorraine Brown, the former head of DocX, faces up to five years in prison and a $250,000 fine following her guilty pleas.
DocX’s parent company also entered into a multi-million-dollar settlement with at least one state over “robo-signing” charges. That’s in addition to the $25 billion National Mortgage Settlement with five of the largest mortgage lenders in the country, which also includes an extensive compliance mandate.
Ladd offered some tips for Notaries who may be faced with requests to notarize improper transactions:
- Have a non-confrontational conversation with your supervisor before any Notary request has been made. Be proactive.
- Be prepared with statutory requirements and current news clippings to support your position.
- Notaries who recently learned they had been executing documents improperly have the hardest challenge: Admit mistakes to a supervisor and explain why they can no longer execute documents improperly.
- If you are employed by larger companies, do not hesitate to contact your company’s ethics hotline when a request seems illegal or unethical.
- If you are asked to execute an improper/illegal document, stand firm and follow the statutory laws of your state. Then report the incident through proper channels.
- If you have doubts about a request, contact the NNA’s hotline for assistance.