In the midst of foreclosure horror story after story, comes news about a rushed-through Senate bill that makes it harder for homeowners to challenge foreclosure documents by requiring that courts accept out-of-state notarizations. Falsified documents, or just sloppy documentation, and "questions about improper notarizations have figured prominently in challenges to the validity of these court documents, and led to widespread halts of foreclosure proceedings."
The White House is taking a close look at the bill, which Obama has not yet signed.
"We are reviewing the legislation, but do have concerns," a White House official told HuffPost.
Max Gardner, a foreclosure defense attorney, said the timing of the bill was suspicious, considering fraudulent notarization of bogus foreclosure affidavits is at the heart of a scandal that has prompted the nation's largest banks to pause foreclosures in 23 states.
"The timing is just a little curious to me that all of a sudden you can't get anything through the Senate at all and then all a sudden on a voice vote," Gardner said. "This was first introduced in the House in 2007."
"The thing that concerns me about the bill is that the provisions in it that allow for digital notarization by electronic means," said Gardner, "which implies that anyone with the appropriate software could notarize a digital document or image of a document, which would allow someone to notarize a document without seeing someone execute the document or doing the things a notary is supposed to do. In my mind that would lead a broad exception for more fraudulent practices."
With more and more states halting or considering halting foreclosures because of widespread foreclosure fraud, making it easier for banks to rush the foreclosure process through is a really bad idea. Dday, who has been following the foreclosure fraud crisis exhaustively, points out that this isn't the only problem in the issue. "Judges are invalidating foreclosures because of the lack of a clear title. This would not bear at all on that problem. But it’s true that it could close off one possible avenue for borrowers to get at this fundamental fraud."
Borrowers have to have all the tools available to challenge fraudulent foreclosures, and making that harder for them would be a mistake. The White House has good reason to be concerned, and this iteration of the legislation--rushed through in the midst of a burgeoning crisis of foresclosure fraud--should be rejected.
Update: A lawyer weighs in. Armando:
The Interstate Recgnition of Notarizations Act would require state and federal courts to:
Each court that operates under the jurisdiction of a State shall recognize any lawful notarization made by a notary public licensed or commissioned under the laws of a State other than the State where the court is located[.]
What does "recognize" mean in this legislation? In terms of admissibility, most trial lawyers are familiar with the concept of the exception to the hearsay rule for public records and the concept of judicial notice. Is this what the term is intended to mean? Are notarized documents now to be viewed as "public records?" Because they aren't....
What has been happening around the country in foreclosure proceedings has been the denial of due process for homeowners who want to challenge the veracity and validity of the evidence that the foreclosing parties have been introducing as evidence. This law will only exacerbate this problem.
At the very least, a legislative history and clear definition of what Congress means by the term "recognize" is required. The President must veto this bill and send it back to Congress so it does its work of properly drafting this legislation.
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