In a recent closing that I did on a FHA loan, the borrower saw the abbreviation 'MIP' on one of the documents and asked me what that meant. I told him that it stands for 'Mortgage Insurance Premium'.
Last night I had a closing and there were some questions the borrower had regarding the 1-4 Family Rider. He thought he could cancel the loan if he couldn't resolve his problem. He asked me if he had a 3-day right to cancel. I told him that he didn't, because it was an investment property:
I know that there is no point in looking through the stack of documents for a Right to Cancel, or to call the title company and ask them if they left it out by mistake. I just know that there is no right to cancel on an investment property. It was part of my training.
In the course of a real estate closing I am asked many questions like this. And I freely answer them. It's my job as a notary signing agent. I have to understand all of the types of loans, know all of the documents, and be able to explain the documents to the borrower as I present them.
But there are certain questions that I have to decline to answer. If the borrower asks me for legal advice, I have to decline. That is unauthorized practice of law. But I'm the notary, right? I am a notary signing agent, but I am not an attorney.
To some extent I can tell the borrowers what they are signing, and even why they are signing a document. For the most part these are judgement calls. But there is a fine line that I have to be careful not to cross over. I have to know the law -- notary law -- and what constitutes unauthorized practice of law.
In a real estate closing there are two roles that I have to play. I am both a notary public and a notary signing agent. I have to be able to reconcile the two roles.
Colorado notary law tells me that I may not assist the borrower in completing any of the loan documents, or help them to understand a document.
But there are exceptions to the rule. Non-attorney notaries who have undergone special training in real estate, for example, and have achieved certification, may advise the borrower about real estate documents, but no other types of documents.
And it's in this area of real estate where there are the gray areas -- the areas where I have to make judgement calls as to what I can and cannot do -- what constitutes unauthorized practice of law, and what does not.