I still don’t get how notary signing agents are permitted to go to loan applicants and have loan application packages signed for a fee and NOT consider this part of the loan origination process.

Here’s a thread on Notary Rotary discussing what are called RESPA signings. A RESPA signing is the upfront loan application package containing the original 1003 and the lender disclosures.

Sometimes it’s just a matter of signing the documents face to face - presumably to meet FHA face to face requirements. Sometimes the notary is assisting the borrower in the completion of the documents. In most instances there are no notary seals involved as these documents typically do not require notarization.

When I’ve raised the issue in the past, lenders and notaries have explained that the service is not loan origination but more in the line of a glorified courier service. As a self-proclaimed policy wonk, I just don’t agree. I really do believe that the so-called RESPA signing is an integral part of the loan origination process and therefore would somehow need to be connected to federal or state licensing laws.

If the notary were an employee of the lender or mortgage broker, there’d be no need to raise the issue. These notaries, however, are independent contractors. Particularly in the case of the FHA loan program and the careful restrictions HUD has placed upon approval of origination entities, I’ve got to think that RESPA signings are a rogue practice operating under the radar of regulators.

Why do I care? Well, companies who play by the rules are having to compete with the scofflaws who don’t. We’re all paying the heavy price of living in a land in which scofflaws reigned supreme. I’d like to see the good guys get some relief and that means rogue practices in title and lending have got to be found and stopped.