White House Says President Won't Sign Bill That Could Make It Harder To Fight Foreclosures

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]


Edit Your Comment

  1. dragonfire81 says:

    Does it shock anyone that Aderholt is a Republican?

    • greggen says:

      Not as shocking as the fact that both Republicans and Democrats voted for this, without debate.

    • cmdr.sass says:

      Does it shock you that the bill is also sponsored by Rep. Bruce Braley (D-Iowa), Rep. Mke Castle (R-Del.) and Rep. Arthur Davis (D-Ala.)?

      Does it shock you that the bill was passed without debate?

      This is a bi-partisan snow-job, so sparse us.

    • trey says:

      are those crickets?

    • dangerp says:

      Not as shocking as a knee jerk reaction targeting one party when both are clearly in on the game.

      No, wait. That’s not shocking at all.

    • ARP says:

      Sorry, on this one, the D’s are just as much to blame as the R’s. Both are in the pocket of the banks. And Citizen’s United is only going to make it worse for D’s, so expect them to continue to shift right on consumer issues.

    • Trick says:

      Not as shocking as seeing some political tool looking to blame Republicans because they like to see the letter (D) in front of their politicians names.

      But of course had (D) Bruce Braley or (D) Arthur Davis been mentioned 1st you would not have moved on to the next article mentioning someone with a (R) to display your total shock and outrage, right? Of course you wouldn’t have.

  2. FrugalFreak says:

    I smell something fishy, want a iced Tea with it? No Digital Forgeries…Uh mean Notarizations.

  3. peebozi says:

    This has just about nothing to do with consumners. It is about interstate COMMERCE. there must have been something in that bill that the owner’s of DC (by “owners” i mean “those who bribe and own all of the politicians in DC”) didn’t like.

    Nothing in there about protecting citizens (except for our corporate citizens), it’s just about protecting business.

    • FrugalFreak says:

      When this gets passed and mortgage holders present fake notaries on forms stating they followed the law of eviction and notice, well that DOES have to do with Consumers. EVERYTHING commerce eventually has to do something with consumers, the secret back door boys club for crookery should be boarded up and closed!

    • Galium says:

      You seem to forget that SCOTUS said that business’s are citizens, therefore they need consumer protection.

    • AstroPig7 says:

      Exactly how much commerce is there without consumers?

      • shawnamuffin says:


      • peebozi says:

        How about “a shit ton”? $100 trillion in credit default swaps alone.

        How much commerce is there before the final product reached consumers?

        all of that commerce between oil companies to drill into a well is a lot of money.

        maybe “consumer” should have been defined better.

  4. u1itn0w2day says:

    States rights?

    I’m all for interstate commerce but certain things like administrative machinations are not true commerce.

    Hmmm, right as the economy is going into free fall this bill first pops up. Just by coincidence with alot of potential foreclosures on the horizon. hmmm……

    • peebozi says:

      but this is for COMMERCE…things are different when you use the word “commerce”.

      like “the interstate commerce between the corporation BUYING the politicians is big business in the US Congress & white house”.

    • Darury says:

      Since the 1930’s the word “commerce” has become pretty much anything Congress feels like. Once the Supreme Court ruled growing your own product in State A as impacting interstate commerce by not requiring you to purchase the product from State B. They’ve essentially allowed the butterfly effect on anything they feel like.

  5. ARP says:

    Update: Obama says he’s going to veto it. Good- we’ve been stuck in a race to the bottom, so that a electronic notarization from a state that has a very low threshold for these signatures should not be dispositive.

    • OnePumpChump says:

      I’m glad we got the lesser evil.

      I’d rather choose a system other than the one that gave us those choices, though. Sigh.

  6. TuxthePenguin says:

    As much as people would want to say so, there really isn’t much nefarious about that. Each state grants a person a license to be a notary. Right now Louisiana isn’t forced to accept a notary’s mark if they are from Texas.

    Frankly, its kind of stupid. What it’d do is keep me from having to pay to have my secretary a notary in every state that I have clients…

    • ARP says:

      The problem is that many states are lax when it comes to these laws and so it has a “race to the bottom” element to it. If the states had some minimum standard for notaries, electronic notarizations, etc. I would actually support this because it would help interstate commerce.

      • TuxthePenguin says:

        So have reciprocity rules like they do with CPA’s. Come on, this isn’t rocket science…

        • ARP says:

          I agree, but that’s not what’s in the bill. The bill essentially says you must accept out of state/electronic notarizations…full stop.

          So Congress needs to amend the bill to have basic levels of protection. The problem is that the banks don’t want that level of protection, will lobby their primarily (R) and some (D) congress people, and the bill will disappear or be just as crappy.

    • palfas says:

      Of course there is nothing nefarious about the bill on it’s face, it’s just how easily it can be abused in its current form. If you can’t see that, then you are truly blind.

  7. Mr. Pottersquash says:

    Hey Obama haters, KEEP THE CHANGE!!!!

  8. mac-phisto says:

    thank you, mr. president.

    as for you, senators…perhaps you can explain to ‘we the people’ how this is a matter that deserves the collaboration that has eluded your body so frequently lately.

    gentlemen’s club, indeed.

  9. grasshopper20 says:

    Any bill that could potentially help banks throw families out of their home is as nefarious as it gets tux

  10. oldwiz65 says:

    It doesn’t matter if the president is a Republican or Democrat; the banks and big businesses have given tons of money to the campaign and they fully expect something in return, like special considerations. In other countries we would call it bribery, here we just call it lobbying. A Republican president would do the same thing. Very few politicians actually give a rats tushie about voters; they don’t contribute much money to the election campaigns. Corporations like big banks are the big contributors and they have to be satisfied one way or another for the money they have contributed.

  11. GrimJack says:

    I searched the intarwebs for information on this vote, but couldn’t find it (even on the Senate’s own site). Are ‘voice votes’ not recorded in the sense of who voted yea or nay? I’m really interested on who among our esteemed senators voted to pass this piece of corporate dung…

  12. EverCynicalTHX says:

    No love of big banks here and no problem with requiring them to show documentation and bring it to the state in which it was originated/notarized,

    Since Democrats ultimately voted this bill in and then suddenly changed their minds, the whole thing does smells of political pandering coming into the November election sadly.

    Shouldn’t have been passed regardless..weird stuff – maybe both parties need to read bills before they pass them?

  13. grapedog says:

    This bill should not be signed, EVER.

    Look what happened when Usury Laws became nationalized. The banks scoured the 50 states, looking for a state with loose usury laws, and then that gave birth to the high interest credit card, the 35%+ interest rates from South Dakota.

    So now, the banks and forclosure mills can look for another state with loose notary laws and rubber stamp anything and everything they want?

    This isn’t for CC’s either, this is peoples lands and peoples homes. These should stay at the state level… and leave it as States Rights!

  14. zifnab0 says:

    I’m shocked by how many people are drinking the administration’s kool-ade (or more accurately, flavor-ade) on this. The administration wanted a bill it can slap down and say “this is all about big banks hurting consumers” before the mid-terms, and the Dems handed it to him (even tho it passed with unanimous consent).

    Practically speaking, such a bill would have been a big advantage to banks and lawyers, and make business transactions across state lines a LOT easier.

    But apparently benefiting banks and lawyers is enough for the knee-jerk reactionaries here to jump on the bandwagon and oppose this bill. Or Consumerist has transformed into a(n even worse) water carrier for the administration.

    • fedupbs says:

      i think you hit the nail right on the head – this is nothing more than something the demo -crats can use at election time. OOOOOO look president O’bama is looking out for the little guy.

      Bull crap. Vote em all out

  15. VeganPixels says:

    If you’re an uncompensated estate administrator or an heir, make sure your legator dies in your locale. Or expect to spend a friggin’ fortune on airfare.

  16. Scooby111 says:

    So now the President is worried about ‘unintended consequences’?

    Where was this concern when we passed the bailout, the Stimulus, the Healthcare reform act, or the financial reform act? All of which were passed so fast that legislators didn’t even read the bill and the President signed immediately.