Updated: 4:42 p.m.
President Barack Obama will pocket-veto a bill that could make it easier for banks to foreclose on homeowners, White House spokesman Robert Gibbs said Thursday.
The Interstate Recognition of Notarizations Act relates to notarizations for financial documents and was designed to remove impediments to interstate commerce. But the White House agrees with consumer groups that it could have the unintended consequence of fueling unfair home foreclosures. Specifically, the bill could make it more difficult for homeowners to challenge improper foreclosure attempts.
“The president is exercising a pocket veto and sending that legislation back to the Congress to iron out some of those unintended consequences,” Gibbs said during a briefing.
White House Communications Director Dan Pfeiffer wrote on the White House blog that Obama believes “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.”
The bill was originally sponsored by Rep. Robert Aderholt (R-Ala.). It passed the Senate and was sent to Obama on Sept. 27.
Aderholt said there is “absolutely no connection whatsoever” between his bill and a recent spate of foreclosure documentation problems at mortgage companies. He said fears about his bill stem from “misunderstanding” about what it actually does: require lawful notarizations.
“This is a bill that would help people, and I am disappointed that it was vetoed,” the Alabama Republican said. “I am eager to get another version of this bill completed and passed in November.”
But House Judiciary Chairman John Conyers applauded Obama’s decision to hold off on signing the measure into law. “At a time when three of the nation’s largest mortgage companies — Ally Financial, JPMorgan Chase and Bank of America — have suspended legal proceedings in 23 states due to document flaws, we need to be very careful not to pass legislation that could allow increased deficiencies,” the Michigan Democrat said. The three have put foreclosures on hold while they review whether their court documents were properly prepared.
A Senate Democratic aide rejected the suggestions in several media reports that mortgage companies or the banking industry pressured Senate Judiciary Chairman Patrick Leahy (D-Vt.) and ranking member Jeff Sessions (R-Ala.) to move the bill. Rather, the aide said, Leahy and Sessions decided to act on the legislation after discussing the issue of interstate notarizations with the National Notary Association.
Leahy spokeswoman Erica Chabot said Thursday that her boss will review the bill in light of the White House’s concerns.
“Sen. Leahy understands the president’s decision not to sign the Interstate Recognition of Notarizations Act, and he supports that decision,” Chabot said. “When Congress passed the legislation, no concerns or objections had been expressed. Now that concerns have been raised, Congress should re-examine whether this bill might have an unintended impact on foreclosures in the future.”