Does anyone know if there is a law/reg that states a loan officer can not be a notary.

Don't know about other states, but in NJ the requirements to be a notary are: resident of the state, at least 18 years of age, never been convicted of a first or second degree crime.

I see no problem with it. However, they should never be allowed to notarize any document in which they are a party to the transaction (acting loan officer). It is a sure set-up for fraudulent activity.

Loan officer as a notary? Sure. They just cannot notarize something they are party to. Can’t notarizing loan documents where they are the loan officer. It is a violation of their appointment as a notary to do so.

I was a lender and a Notary many years ago. This was common then. As the Notary burdens increased, many in these officer positions saw their ticket to get away from all the recording, copying and liability and we allowed our certifications to expire. We did so not because of any requirement. We, or at least I, just didn't want to do it any longer. Certainly YMMV as to reasons stated, but that was it in my case and with several others in similar circumstances.

Our loan officers notarize the mortgages on their own loans every day. What part of their appointment as a notary dis-allows this please. If I go tell them they can't anymore I am going to have to show them cause, but I don't want them doing something they aren't supposed to do. Thanks.

Regardless of the notary rules - can you say fraud? Having the loan officer notarize their own documents is a harbinger of a bad loan office creating fraudulent loans.

I agree with you Randy, but one of the LO's is also my boss and if I go in with that reasoning I know I won't be taken well. Small bank, they truly don't think anything like that can happen here. If I can't show a rule they are breaking I will get the stock 'we haven't gotten in trouble for it and have done it forever' answer. LO's have been here for YEARS too. I fight an uphill battle on a lot of these types of issues. It took me forever to get them to understand not to order their own appraisals!

Randy, maybe this is another regional issue. We do loans for a handful of midwestern states and it's SOP for the LOs to notarize because they do the closings.

I would argue that the inability to commit fraud stems from the fact that they do NOT prepare any of the documents. After they take the application, they have nothing to do with the loan until they meet the borrowers at the closing table.

We always notarized our own mortgages when I was a lender. I think it may be a regional issue.

As long as they don't benefit from the documents being notarized (other than a fee set by statute) it should be OK. If they get paid according to their producing loans, if they act as the notary they may lose any benefit for that loan.
Filing officers may not record any document where you are notarizing your own signature, like on a satisfaction of mortgage.
I would not act as a notary on loans in which I am the officer. Bonding does not protect the notary, just persons that have a claim against a notary. The bonding company usually will sue the notary for any claim they must pay. Also, bonding does not protect the notary for jail time. But, you may look good in strips.

I found this thread while searching "Notary". We have a problem here and I am unsure of how to handle it. Our loan officers are not notaries. We only have 5 notaries in the bank (I guess that is fortunate because that means less people to train). When the loan officers close loans, they take the loan back to the processors to notarize. No one in this FI ever actually witnesses a signature. What are some of your procedures for loan closings when a notary has to be involved?

Going to second the regional issue with my gals from Wisconsin too. LO's notarize their stuff all the time too.

In our area, almost everyone and their brother is a notary. We order our stamp, pay the fee to the state, get a brochure about our duties and wahla!, we are notaries. Each of our locations ahve several notaries on staff.


Whoever is witnessing the closing should be notarizing the docs.

Thanks for your input. I think that's what we'll have to do here. I just don't see any other way.

When I worked for an attorney's office, I'd was asked to step into the room and watch wills, etc. being signed. I'd then notarize them right there so the signers saw me do it.

You should be able to do something similar with your LOs. Have them ask a processor to come into the room for the signing of the mortgage and whatever else needs to be notaized. The processor can then leave while the LO finishes the closing.

Another suggestion that we employ here as another level of control, LO's do not do their own closings. We have two dedicated closers for all mortgage closings, and thus they explain the docs, programs, fees, charges, one more time, and they then notarize all signatures.

Thanks for all of your input. I'm still not sure what we are going to do here. No one wants to change "the way it's been done for 50 years". I guess I've made my report to the board and I'm on record.

"When the loan officers close loans, they take the loan back to the processors to notarize. No one in this FI ever actually witnesses a signature."

You need to check your State laws, but your notaries should be reminded that if there is fraud involved, they could be both civilly and criminally liable for improper notarization. The bank may be on the hook also. Why a notary would ever do this is beyond comprehension based on possible personal liability.

A notary surety bond will pay damages to the wronged, but then the bonding company will go back after the notary for recovery. E&O insurance will not normally cover a breach of conduct.

For example, in West Virgina:

A notary public is liable to the persons involved for all damages proximately caused by the notary's official misconduct. [WV Code §29C-6-101]

When the notary is an employee and performing the notarization in question in connection with work, and if that notary's employer consented to the official misconduct, then the employer is also liable under the law. [WV Code §29C-6-102]

Criminal Penalties

Criminal misdemeanor charges may be brought against a notary public for official misconduct. The penalty for "knowingly and willfully" committing official misconduct is a fine of up to $5,000 and a sentence of up to one year in jail.