Sitting on the President's desk today was a bill that, somehow, in today's adversarial political climate, passed the Senate without debate. The bill, introduced in the House in 2007 as H.R. 3808, forces state courts to recognize notarized documents from out of state. In the wake of last week's announcement that major banks would be stalling foreclosures across the country due to notarization issues, the timing created an understandable suspicion in the halls of the White House.
Originally posted on D. J. Marcus's Law Blog
In response, the White House announced, in its blog:
Today, the White House announced that President Obama will not sign H.R. 3808, the Interstate Recognition of Notarizations Act of 2010, and will return the bill to the House of Representatives. 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.
Notarizations are important for a large range of documents, including financial documents. As the President has made clear, consumer financial protections are incredibly important, and he has made this one of his top priorities, including signing into law the strongest consumer protections in history in the Wall Street Reform and Consumer Protection Act. That is why we need to think through the intended and unintended consequences of this bill on consumer protections, especially in light of the recent developments with mortgage processors.
The President was concerned that the bill would allow large banks to proceed with otherwise troubled foreclosures which have been riddled with document gaps and errors. Because of the securitization of mortgages, banks have had issues tracking down the papers that actually show ownership of the mortgage notes.