The nation’s five largest mortgage servicers now must maintain records of all foreclosure-related notarizations performed on their behalf by employees or third-party contractors, according to details of the National Mortgage Settlement released this week.
The Settlement creates the first nationwide requirement for Notary employers to keep records of notarial acts. It is part of the historic, $25 billion agreement worked out between banks, several federal regulators and 49 state Attorneys General to resolve issues stemming from the “robo-signing” crisis, in which companies engaged in widespread, improper notarization and document signing practices. The settlement terms specifically require the servicer or its third-party vendors — such as law firms and document processing companies — to maintain a record of notarizations. The specifics of the recordkeeping mandate remain to be clarified. However, providing copies of Notary journal entries to employers would appear to satisfy the Settlement terms.
Currently, 21 states and U.S. territories requires Notaries to keep a record of some or all of their official acts. Notaries have long recognized that a complete record can aid authorities in investigating crimes and other improper activity. In addition to the recordkeeping mandate, the Settlement requires all notarizations to comply with state law.
The Settlement also:
- Requires the banks to provide state-specific training for all employees who regularly prepare or execute foreclosure-related documents.
- Requires the banks to ensure that third-party contractors have the appropriate training, experience and qualifications to do the work and that they comply with all applicable rules, regulations and laws.
- Requires signers to sign and date documents by hand. This would prevent the “robo-signing” practice of employees routinely signing documents on behalf of others. The Settlement also bans the use of electronic or mechanical devices except where courts allow documents to be filed electronically.
- Bans financial incentives to employees or third-party providers that foster “undue haste or lack of due diligence.”