NSA Legal & Ethical Standards 3 — Questions and Answers
Question 1: After completing a loan signing, the NSA realizes a signature page was missed. The lender emails a copy and asks the NSA to have the borrower sign it at home. What is the correct procedure?
- The NSA can notarize the page remotely since both parties have already met
- The NSA must arrange a new in-person appointment to obtain the signature and re-notarize properly (Correct answer)
- The borrower can sign and mail it back without a notary
- The NSA can backdate the notarial certificate to the original signing date
Correct answer: The NSA must arrange a new in-person appointment to obtain the signature and re-notarize properly
Each notarized signature requires the signer's personal appearance before the notary at the time of notarization; backdating or skipping appearance is improper.
Question 2: Which of the following best describes the NSA's duty of impartiality?
- The NSA must always side with the lender because the lender is paying for the service
- The NSA must serve all parties fairly and must not advocate for any party's interests (Correct answer)
- The NSA must complete the signing regardless of borrower concerns to remain neutral
- The NSA must charge the same fee to all parties involved
Correct answer: The NSA must serve all parties fairly and must not advocate for any party's interests
Impartiality means the NSA has no personal interest in the outcome and must treat all parties fairly without taking sides.
Question 3: A borrower signs a document but then crosses out a clause and initials it. The NSA should:
- Accept it as a valid alteration if both parties agree
- Refuse to notarize it and inform the lender so a corrected document can be provided (Correct answer)
- White out the crossing and proceed
- Notarize the page and note the alteration in the journal
Correct answer: Refuse to notarize it and inform the lender so a corrected document can be provided
Alterations to loan documents after preparation are unacceptable; the NSA should stop and contact the lender to provide a corrected document.
Question 4: State notary law requires that the NSA use a specific notarial wording for an acknowledgment. The title company's form uses different wording. The NSA should:
- Use the title company's wording because they are the client
- Use the state-required wording, even if it means modifying the certificate (Correct answer)
- Use whichever wording is shorter to save time
- Skip the certificate and rely on the signature alone
Correct answer: Use the state-required wording, even if it means modifying the certificate
Notarial certificates must comply with state law; state statutory wording takes precedence over a client's preferred form.
Question 5: An NSA is offered a large bonus by a mortgage broker for every loan that closes without the borrower exercising the right of rescission. Accepting this bonus would:
- Be permissible as a performance incentive
- Create an illegal kickback arrangement and a serious conflict of interest (Correct answer)
- Be acceptable only if disclosed to the title company
- Violate only state law but not federal law
Correct answer: Create an illegal kickback arrangement and a serious conflict of interest
Accepting compensation contingent on the borrower not rescinding creates a kickback arrangement that violates RESPA and compromises the NSA's impartiality.
Question 6: The Right of Rescission under the Truth-in-Lending Act gives borrowers on certain refinance transactions how many business days to cancel?
- 1 business day
- 3 business days (Correct answer)
- 5 business days
- 7 business days
Correct answer: 3 business days
TILA's Regulation Z provides a three-business-day right of rescission for refinances of a principal dwelling.
Question 7: An NSA who is also a licensed real estate agent is asked to notarize a deed for a property in which the agent has a listing commission. The NSA should:
- Proceed because notarizing and listing are separate roles
- Decline to notarize because of the direct financial interest in the transaction (Correct answer)
- Disclose the interest and proceed if the parties consent
- Ask a colleague to witness the notarization instead
Correct answer: Decline to notarize because of the direct financial interest in the transaction
A notary with a direct financial interest in the transaction is disqualified from notarizing that document in most states.
NSA Legal & Ethical Standards 3
After completing a loan signing, the NSA realizes a signature page was missed.
The lender emails a copy and asks the NSA to have the borrower sign it at home.
What is the correct procedure?