Updated 6-29-22. Most lenders and title companies require Notary Signing Agents to undergo background screenings on an annual basis in order to perform loan-signing assignments. Many Signing Agents have asked why this screening is required. This article answers some of your most common questions about background screenings.
1. Why do Notary Signing Agents need background checks?
The Consumer Financial Protection Bureau, a federal regulatory agency, requires lenders to follow strict standards when handling sensitive private consumer information — including borrower information on loan documents. These standards apply to bank employees, contractors and third-party vendors that work with lenders.
To meet CFPB standards, most banks and title companies ask Notary Signing Agents to provide proof they have passed a rigorous background screening. As independent agents, NSAs are trusted with loan documents that contain sensitive personal and financial information about borrowers. And unlike regular employees, they carry out their duties without direct supervision. Many trusted background screenings are based on the standards in the Signing Professionals Workgroup's Signing Agent Code of Conduct and Signing Presentation Guidelines.
Because these duties are so important, lenders and title companies want to protect their customers by verifying that any Signing Agents who interact with customers and handle the customer’s private information are trustworthy and honest.
Special Note: During the pandemic, many court clerk's offices experienced staffing shortages and budget limitations. As a result, background checks in a few jurisdictions may take longer than expected. The NNA's vendor, Backgrounds Online, is working to resolve all these delays.
2. Aren’t all Notaries already background screened when they apply for their commissions?
No. This is a common misconception about background checks. In fact, fewer than one-fourth of all states perform any kind of background check on Notary commission applicants.
3. If my state requires Notary applicants to undergo a background check, why do I need another one?
There are a couple of reasons why lenders and title companies cannot accept the state-mandated background check for Notaries.
First, state background checks for Notary commissions only screen for convictions that disqualify one from a Notary commission, usually just felonies. But lenders and title companies believe it is also important to check for serious misdemeanors and other infractions such as driving violations as part of their background screening requirements for Signing Agents.
Second, the Notary background screening results in states such as California are only available to state officials for review. States do not provide background reports on Notaries to financial industry companies.
Question 4: Why must I get a background check so often?
While title companies and third-party vendors are not regulated by the CFPB, their contracts obligate them to comply with the requirements lenders must meet. As a result, the lender or title company must be able to document that any NSA they use has passed a check that complies with CFPB consumer protection standards. That’s why many companies ask Signing Agents to obtain an updated screening every 12 months. Even states that run background checks for Notary applicants only do so once during each commission period.
If a Notary is convicted of a serious crime before then, lenders need to know in order to comply with federal regulations. In addition, a conviction does not automatically cause the Notary to lose their commission. That process can take months or longer.
5. Can the background screening provider share the results with anyone who asks for it?
No. Background screening results are only provided to the Signing Agent. Signing Agents can share them with whomever they choose, and businesses that receive them must follow strict rules regarding the security and sharing of the background screening information.
David Thun is the Assistant Managing Editor at the National Notary Association.