President Obama to Veto Notary Bill Because of Foreclosure Implications

A controversial notary bill quietly flew under the radar last week amid the unsettling ""reports of so-called 'robo-signers'"":http://dsnews.comarticles/paperwork-missteps-expected-to-prolong-foreclosure-crisis-in-certain-states-2010-10-04 stationed at major servicing shops who reflexively shoveled foreclosure cases through the pipeline without verifying their validity or having the documents properly notarized.

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The bill, H.R. 3808, also known as the Interstate Recognition of Notarizations Act, would require state and federal courts to ""recognize any notarization made by a notary public"" licensed in any state as valid, including electronic signatures.

Consumer advocates and critics of the legislation say it would give mortgage lenders and servicers an edge by making it harder for borrowers to contest the legality of a foreclosure on the grounds of improper documentation.

The bill was authored by Rep. Robert Aderholt (R-Alabama). It passed the House back in April and cleared the Senate last Monday with unanimous approval.

President Obama says he will not sign the bill into law and is sending it back to Capitol Hill with a ""pocket veto"":http://en.wikipedia.org/wiki/Pocket_veto â€" a maneuver that allows the president to squash a bill by

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""pocketing"" it so that it is not signed or directly vetoed within the mandated 10 days of it hitting the president's desk, provided Congress adjourns during the 10-day window.

In a ""blog post today"":http://www.whitehouse.gov/blog/2010/10/07/why-president-obama-not-signing-hr-3808, Dan Pfeiffer, the White House communications director, said, ""The Interstate Recognition of Notarizations Act of 2010 was designed to remove impediments to interstate commerce. While we share this goal, we believe it is necessary to have further deliberations about the intended and unintended impact of this bill on consumer protections, including those for mortgages, before this bill can be finalized.""

According to Pfeiffer, President Obama has made consumer protections one of his top priorities, and they have been called into question “in light of the recent developments with mortgage processors.”

Rep. Aderholt has been pushing the legislation for four years, with the goal of removing impediments to inter-state commerce for businesses and corporations, and the White House acknowledges in its statement that Aderholt and the bill’s proponents “had the best intentions in mind.” But with the notary and paperwork questions surrounding a growing number of foreclosure cases, the president says he just can’t pen his name to the bill.

According to a ""statement from Aderholt"":http://aderholt.house.gov/index.cfm?sectionid=20§iontree=6,20&itemid=1046 last week, he was expecting the bill to be signed into law without reservation.

“This legislation will help businesses around the nation by eliminating the confusion which arises when states refuse to acknowledge the integrity of documents notarized out-of-state,” Aderholt said. “This issue continues to be a problem for businesses and individuals who engage in business across state lines. This bill offers a common sense solution to a problem that is more widespread than is generally recognized.”