As we expected, and suggested last night, Obama would not enact H.R. 3808 for fear of the populist fallout that would follow. Indeed, Dow Jones has just confirmed that Obama will "Pocket Veto" the notarization bill, eliminating the last possible roadblock for a tsunami of legal action against mortgage servicers.
From Dow Jones:
President Barack Obama won't sign into law an overlooked piece of legislation that critics say would make it easier for banks and others to process foreclosure proceedings without human signatures, a person familiar with the matter said.
Obama hasn't yet issued a veto during his presidency. In this instance, he will send the bill back to Congress using a process known as a "pocket veto."
His decision comes amid growing complaints from lawmakers that the administration and regulators haven't done enough to intervene in a scandal tied to thousands of foreclosures that critics argue were processed with improper documentation.
Ally Bank, Bank of America Corp. (BAC), and J.P. Morgan Chase & Co. (JPM) have halted foreclosures in 23 states in recent weeks to review how many documents tied to these foreclosures might have been filed improperly. A central issue is the practice of "robo" signing, when documents are signed quickly by computers or people who don't review the documents.
The bill in question passed the Senate on Sept. 27 by unanimous consent. The House passed the bill by "voice vote" in April. Many bills that aren't considered controversial pass this way, with members of both parties essentially letting it move through Congress without debate.
The bill is called the Interstate Recognition of Notarizations Act of 2009 and it was authored by Rep. Robert Aderholt (R., Ala.). A spokesman for Aderholt didn't immediately return a call for comment.
The bill was cosponsored by Reps. Bruce Braley (D., Iowa), Michael Castle (R., Del.), and Artur Davis (D., Ala.).
The bill would require state and federal courts to "recognize any notarization made by a notary public" licensed in any state. This would include electronic signatures. The bill would have been a big win for businesses who complained it was too easy for people to challenge notarized documents in court when notaries were licensed in different states.
"This legislation will help businesses around the nation by eliminating the confusion which arises when states refuse to acknowledge the integrity of documents notarized out-of-state,"
Aderholt said when the bill passed the Senate. "This bill offers a common-sense solution to a problem that is more widespread than is generally recognized."
It is unclear how the bill might have affected the current foreclosure scandal, but liberal groups have insisted in recent days that Obama veto it. A spokesman for Aderholt said: "Contrary to some blogs and reports, there is absolutely no connection whatsoever between Congressman Aderholt's legislation and the recent foreclosure documentation problems."
Ohio Secretary of State Jennifer Brunner said Tuesday if the bill became law it would make it harder for consumers to challenge foreclosures.
The bill raised difficult policy decisions for government officials. Some argue it should be easier for banks and others to process documents electronically to help reduce the backlog of foreclosures and help the housing market. But there have also been questions about the loan-servicing and foreclosure-processing industry, which is loosely regulated and now faces accusations of fraud.
h/t London Dude Trader