In April, legislation was introduced in the House of Representatives that would require courts to recognize out-of-state notarizations. It got little notice at the time and was deemed dead-on-arrival by some. Then in the last couple weeks, GMAC, JPMorgan Chase and Bank of America announce they are freezing foreclosures in multiple states, in part because of improper notarizations. Suddenly, this bill passes through the Senate without any debate. It was enough to make the White House say “hmmmmm” when it arrived at the Oval Office for the President’s signature.
In a blog post on the White House website, White House Communications Director Dan Pfeiffer writes:
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.
Earlier today, one foreclosure defense attorney told HuffingtonPost that it seems awfully fortuitous that this bill got passed by the Senate when it did:
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… 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, 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.
According to the bill, officially known as the Interstate Recognition of Notarizations Act, any Federal or State court would have to recognize electronic notarizations and any notarization, regardless of the notary’s state, “when such notarization occurs in or affects interstate commerce.”
In a statement to HuffPo, the bill’s sponsor, Rep. Robert Aderholt, is attempting to distance himself from insinuations that the bill itself had anything to do with giving coverage to mortgage holders:
There is absolutely no connection whatsoever between Congressman Aderholt’s legislation and the recent foreclosure documentation problem… Congressman Aderholt has been pushing this bill since April of 2005 when he first introduced it in Congress. Obviously, there was no controversy regarding foreclosure documents at that time.
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.
Why President Obama is Not Signing H.R. 3808 [WhiteHouse.gov]
White House Has ‘Concerns’ About Notarization Bill Seen As Foreclosure Cover [HuffingtonPost]