Question:
My client lives in North Dakota and will not be in Arizona to sign her final loan documents. The Lender will not allow her local Bank to take signatures. Why?
Answer:
Banks, out of state title companies, your client’s cousin LeeRoy that is a notary, probably do not carry the proper Errors and Omission (E & O) Insurance for mortgage documents.
This week a borrower signed his loan documents for his Phoenix property at Clueless Title Agency located in his home state. At funding the funder asked for proof that Clueless’s E & O insurance covered outside signings. When contacted, the branch manager knew immediately that it did not. By the way, her quote, when called: “Whoops, got caught again!”
Another out of state client took his documents to his local bank. The funder asked for E & O insurance that covered outside mortgage signings ($500,000 per occurrence). They couldn’t provide the coverage.
Title company’s E & O insurance coverage typically is specific to their employees, notarizing transactions insured by their own title insurance.
Most of the title companies utilize independent mortgage document signing companies for off-site signatures. They are insured for up to $500,000 per occurrence.
There is nothing worse than to have a smooth transaction morph into drama when it is discovered, at funding, that the signer was not authorized to take signatures. It can be an unnecessary, expensive and stressful delay of closing.
FYI: The lender’s closing instructions spells out the requirements for off-site signings. But you need to read them first.
