President Barack Obama recently vetoed the controversial Interstate Recognition of Notarizations act that was originally introduced in 2005. The bill was introduced by Rep. Robert Aderholt, (Republican, Alabama) and if put into affect it would have allowed lenders to expedite the foreclosure process. Sen. Patrick Leahy (Democrat, Vermont.), the Chairman of the Judiciary Committee, was able to move the legislation through the Senate without debate on Sept. 27. The President's action has stopped this bill dead in its tracks, for now.
Although the White House noted that the bill was created to ease restrictions on interstate commerce, industry insiders considered the bill "bank-friendly" and not in the best interest of consumers. Consumer advocates believe that if the bill did pass, it would become increasingly challenging for homeowners to fight fraudulent foreclosures.
The Interstate Recognition of Notarizations Act
If passed, the Interstate Recognition of Notarizations Act would have mandated that courts be obligated to recognize the notarization of documents filed by large, out-of-state companies. That move would have made it more burdensome and expensive for consumers to fight the validity of the documents and would have legitimized electronic notarization, produced by computers not humans.
The Huffington Post reported that a spokesperson for Congressman Aderholt's sent an email stating "The Interstate Recognition of Notarizations Act will improve interstate commerce by requiring that lawfully notarized documents be recognized across state lines. The law, once enacted, will strengthen consumer protections by requiring identification of notaries by means of seal and in rendering electronic documents tamper resistant."
According to the terms of the bill, the Interstate Recognition of Notarizations Act would "require any Federal or State court to recognize any notarization made by a notary public licensed by a State other than the State where the court is located when such notarization occurs in or affects interstate commerce."
Controversy Surrounding the Bill
Supporters of the bill originally thought that it would be signed into law without complications, as there was no resistance to the act when first presented to both the Congress and the Senate. However, after the recent news regarding a new wave of foreclosure fraud in Florida and California, politicians started to view the policy in a different light.
Over the past few weeks a foreclosure scandal regarding fraudulent notarization of phony foreclosure affidavits caused the country's largest banks to halt foreclosure proceedings in 23 states. Bank of America (currently halted foreclosures in 50 states) Wells Fargo, Citigroup, and JPMorgan Chase are all being accused of participating in the bogus foreclosure affidavit scheme. The belief is that thousands of homeowners wrongly lost their properties based on the electronic notarization system similar to the one that the Interstate Recognition of Notarizations Act would legalize. It was this clamor that encouraged the President to veto the bill.
What's Next?
Once a bill is vetoed, it still can become law. Congress can potentially override the veto if a two-thirds majority votes in its' favor in each house. Since both Democrats and Republicans have raised objections to the new law, that is less than likely. At this point, further examination and restructuring of the bill language is expected to happen before the bill sees the light of day again. At this point it is too early to tell how the politics will play. Additionally, it is not known how the government is going to address the recent foreclosure fraud scandal.
The best way to avoid becoming a victim of foreclosure fraud is to avoid the process altogether. Consumers who feel that they are on the brink of financial ruin can try to refinance their mortgages in order to lower monthly payments, sell their home in a short-sale, request mortgage forbearance from the lender or even get some government financial aid. Consumers who opt to refinance their home loans can rely on industry leader Mortgage Marvel to provide them with mortgage rate information in real time and without requiring any personal information.
