Merchants Bonding Company-doesn't cover NSA e&o issues

2/27/2020 @ ~ 12:14 I talked to Kim: Claim’s Specialist at Merchant Bonding, I described a hypothetical situation in which a NSA missed a signature and was sued because the rate lock expired. She said I was not covered, only notarized documents were covered. She said** “THEY DON’T PROVIDE NSA E&O POLICIES”.**

I then reviewed the policy and it said Notarized Acts were covered, so a signature only document is NOT COVERED. NNA did not tell me this and I only became aware of a potential problem when this issue was discussed in the Notary Cafe… So who can recommend a NSA E&O policy provider.

I’m not to happy with NNA, I took their courses and bought the policy thru them and they didn’t mention that it doesn’t cover NSAs which is wrong. NNA is claiming it’s not their fault and won’t refund my money.

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Sorry you went through this - it’s been common knowledge for a long time that standard E&O only covers notarial errors. If you want coverage for issues regarding signing of loan docs, either professional liability insurance or Notary Signing Agent E&O (offered by Notary Rotary) is the way to go…both are pricey but not as expensive as the cost of defending yourself in a lawsuit.

This is why I always question why companies insist so heavily that we carry XX amount of E&O when, chances are the error is not even going to be covered.

And no, no one will refund your money for your lack of research and due diligence…sorry to put it so bluntly but it’s the truth. Had you asked that question here before you purchased, many of us could have helped guide you through that maze.

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  1. NNA has offered a 50% refund
  2. Notary Rotary sells a policy that doesn’t say NSA or Notary only and it is the same exact price as the one I have, so I suspect it’s Notary only. Where did you get your information that Notary Rotary offers E&O for NSAs?

“2) Notary Rotary sells a policy that doesn’t say NSA or Notary only and it is the same exact price as the one I have, so I suspect it’s Notary only. Where did you get your information that Notary Rotary offers E&O for NSAs?”

Straight from the Notary Rotary website but it’s not available in all states I don’t recall what state you’re in Dan…but here it is…

https://www.notaryrotary.com/insurance/notary_insurance.asp?id=DAI7PI7J

"CNA Surety Signing Agent Errors and Omissions (E&O) Insurance is specifically designed for notaries who assist with loan signings. This policy is currently available in the following states only: AL, AK, AZ, CO, CT, DE, FL, GA, HI, ID, IL, IN, IA, KS, KY, ME, MD, MA, MI, MS, MO, MT, NE, NV, NH, ND, OH, OK, OR, PA, SC, SD, TN, TX, UT, VA, WA, DC, WV and WI.

The policy is a claims-made policy, meaning both the basis of the claim and the filing of the claim must occur while the policy is in force. Coverage for prior acts is not available. The Per Claim Limit is the maximum amount the policy will pay on any one claim. The Aggregate Limit is the maximum amount the policy will pay on all claims combined."

I see on your list for E&O for Arizona and Colorado. But not California. I am in California and have e&o from notary rotary via Travelers Insurance Agency. Do I need to get other E&O Insurance?

That E&O will only cover notarial errors - will not cover anything associated with loan docs (like missed signatures, improper signing, etc etc) - whether you should get other E&O coverage is something you should discuss with your attorney and/or your insurance agent.


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I think I must be slow thinking today but I’m having a hard time understanding some of this. Let’s say that I have a loan refi package that has 8 documents that have to be notarized, and 15 documents that require the borrowers signatures but don’t have to be notarized. Does this mean only errors made on the notarized documents are covered by Merchants Bonding Co (which I too have), and that errors made on the other documents are not covered or??? I’m sorry. I just can’t figure out what this is saying. I’m sorry to say I had no idea there was a problem with Merchants Bonding E&O insurance, so I want to understand this before I renew my policy next year. Thank you in advance for your patience on helping me clarify this.

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You’ve got the concept right. Only ‘notarizations’ are covered. Check into business liability insurance which covers much more. Not sure if it will REPLACE Errors & Omissions or would be ‘in addition to’ it. Ask a lot of questions…

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Thank you so much! You have given me a lot of good information on various topics over the past couple of years. I appreciate that a lot!

i had no idea of this as well. good to know now. i am also in CA where I guess i need to do more research on insurance coverage. Why would a missed signature on a non notarized document create a fixed rate not to be locked down. aren’t documents sent back in time for review and that to be held? confused. if documents are sent back next day or day following, that still allows the one day before the disbursement begins for the title company to review. wouldn’t they reach out immediately if anything is amiss? Would scanning full set of documents back to title so they can begin their review help safeguard this type of situation?

Sorry I haven’t responded until now, Linda - I was out working (Field Rep for the Census Bureau here) -

As Arichter said - concept is right except for one small detail
“package that has 8 documents that have to be notarized, and 15 documents that require the borrowers signatures but don’t have to be notarized. Does this mean only errors made on the notarized documents are covered by Merchants Bonding Co (which I too have), and that errors made on the other documents are not covered or???”

The only thing covered by standard notary Errors & Omissions insurance is errors you make IN YOUR NOTARIAL ACTS - YOUR NOTARIAL CERTIFICATES…the small detail is where you said “errors made on the notarized documents” - no - it only covers errors you make in your notarization.- it does not cover any errors within the documents or with the signing of the documents (Something wrong with your certificate, you fail to properly identify the signers, you fail to sign the cert yourself, you fail to stamp, if in CA, you certify capacity in your cert which is a no-no). Only errors with your notarial acts (your certs) are covered.

I hope this helps.

BTW…I should let you know - the all caps in my previous post are not meant to be shouting at anyone - did it for emphasis. :slightly_smiling:

Still looking for CA E&O for NSA, I’m currently looking at this one, I needed clarification on their definition of ‘notary services’…I’d suggest anyone should look closely at their policy if it doesn’t specifically say it covers NSAs.:

"Markel Insurance Company includes Signing Agent responsibilities within their Notary Services definition. We have several Signing Agents written with Markel and have provided the following definition for their file and this program.

      Signing agents are notaries public, who usually have experience and/or training concerning the proper execution of loan documents and are hired by mortgage companies, escrow companies, title companies, and signing services to identify loan documents, obtain the necessary signatures, and in some cases deliver the documents to the borrower. A signing agent is an impartial party to the transaction, and must adhere to the notary laws of their state or jurisdiction. In some states of the United States where signing agents are allowed, signing agents may identify documents and can point out terms to the loan transaction. However, signing agents are prohibited from giving legal advice or in any way explaining or interpreting the meaning of any terms or documents, and they are not permitted to prepare the documents, or alter them in any way. A signing agent should not be confused with a mortgage loan closer or closing agent."

They are quoting $341/year for 100k and $427/year for 1,000,000. Can anyone justify the 1,000,000?

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Well, in your case in CA, you know everything is higher in CA, including real estate - considering the risk in CA, where a missed signature or a gross error in getting loan docs signed can cost the borrower hundreds of thousands of dollars (loss of loan, delayed funding resulting in increased payoff on old loan, loss of rate - all based on higher real estate values) - I’d say CA can justify the $1M easily. Don’t forget, in this litigious society, you’re going to be held liable for everything that went wrong and the old saying…“s*** rolls downhill”. In the litigious society we’ve become, people sue not only for actual losses but for “punitive damages” - punishment for the wrongdoer - the notary, if proven to be the sole and proximate cause of their losses.

The justification is something that only you can decide for yourself, and each notary has to decide for themselves, maybe after speaking with an attorney, an insurer and/or a financial consultant - it would be dependant on each individual state laws as far as recourse is concerned - how far can the plaintiff go in getting restitution…if no coverage, can they lien your property, garner your assets or your wages?

Lots to consider depending on your individual circumstances.

Sorry I can’t be more help, Dan.

Another viewpoint to think about: A large amount of insurance may put a bigger target on you for those who are litigation-prone. It’s up to the insurer as to whether to pay & make it go away or spend money fighting a claim. 2 sides of same coin.

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Thanks for posting this question as it was actually quite informative. Thankfully in MI they require a surety bond before issuing the notary certificate. But, I am researching this further!!

are you saying the Merchants Bonding is ok for a Notary Signing Agent’s needs?
I’m in New York

It depends on whether you took standard E&O or if you took Signing Agent E&O…

Price? And do they have it available
Why didn’t nna clarify

**

Notarial Acts vs Signing Agent Acts

**
Notarial Acts –
Checking IDs
Checking ID date
Getting the signature of the affiant
Signing as a notary
Placing your stamp properly

Signing Agent
Getting signatures and initials of all signers
Checking IDs
Properly executing the Notice of Right to Cancel
Outlining the purpose of each document but not giving advice

Notarial acts errors –
Let’s say you are working against a deadline for a rate lock and on a notarized document - Signature name affidavit, or Ltd power of attorney, etc you overlook stamping the document, and a small error needs to be corrected but it can’t be corrected because you didn’t notarize the Ltd Power of attorney form and the rate lock expires

This would be covered by E&O insurance.

Signing Agent Act Errors –
This would be errors on non-notarized documents
Incorrectly dating the Right of Rescission
Missing initials on the Deed of trust or anything else

This would be covered by Notary Signing Agent insurance

You would think these issues would be discovered right away, but sometimes they are not. When that happens the error is usually discovered in an audit quite a while later and the implications can be serious for the lender. If the lender is impacted, they will no doubt look to blame the errors on others and that’s when you insurance comes into play.

Read this to see the implications of Notice of Right to cancel errors - https://consumercomplianceoutlook.org/2010/second-quarter/right-of-rescission/

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