President Obama will not sign into law a measure facilitating interstate commerce because it would have the unintended effect of weakening standards for legal documents in foreclosure proceedings.
The so-called Interstate Recognition of Notarizations Act could possibly make it harder for homeowners to fight foreclosures, particularly in the 23 states were proceedings are run through the court system.
In his veto, the president sided with critics of the legislation and homeowner advocates who have been alarmed in recent days as the measure sailed through Congress without debate.
The law makes it easier for notarized documents to be accepted across state lines. Initially, it was not thought to be controversial, winning bipartisan support.
But the bill made it to the President’s desk just as major lenders, including Bank of America, Ally Financial and JPMorgan Chase, have frozen some or all foreclosure proceedings to review potential irregularities in affidavits that were allegedly approved without verification of case facts.
“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,” said Dan Pfeiffer, White House communications director, in a statement on the White House blog.
The Justice Department and several state attorneys general have launched their own investigations of foreclosure documentation by lender servicers.
The furor ignited last month after reports surfaced of the so-called “robo-signing” of foreclosure affidavits by mortgage servicer employees. The reports came from depositions by lawyers for homeowners.
National civil rights groups, including NAACP and the National Council of La Raza, joined consumer advocacy groups today in calling for a nationwide moratorium on foreclosures, pending the investigations.
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Justice Officials Eye Foreclosure Paperwork Practices by Lenders
Foreclosure Freeze: Bank of America to Review Paperwork for Errors
