Colorado’s U.S. senators Friday applauded President Obama for vetoing what has become controversial foreclosure legislation that would have required courts to accept notarizations, including electronic notarizations, across state lines.
“This two-page bill was designed to help improve the courts’ ability to accurately process notary signatures across state lines. Unfortunately, the reports of robo-foreclosures and fraudulent documentation used by banks that have come to light over the last two weeks raise serious questions about the bill’s unintended impact on consumers,” Senator Mark Udall wrote to the Colorado Independent. “President Obama is right to veto this bill so that those concerns can be addressed. We need to get to the bottom of this issue before any more consumers suffer from unfair and possibly illegal practices.”
Senator Michael Bennet agreed the issues tied to the bill warranted a closer look.
“Continued foreclosures are the worst symptom of a struggling housing market that affects all Colorado homeowners as well as the industries that rely on our housing sector,” Bennet spokesperson Adam Bozzi wrote the Independent in an email. “In some states, it appears lenders may be cutting corners to speed foreclosure, and there is troubling evidence of fraud. That’s the opposite of what the banks ought to be doing – which is seeking at all costs to avoid foreclosing on people’s homes. Michael is relieved to see some action is being taken. Several banks which have identified internal problems with their foreclosure process are freezing foreclosures pending an investigation and reforms to fix their process. State attorneys general should probe these matters to deter future fraud, snuff out existing problems and hold wrongdoers responsible.”
H.R. 3808, the Interstate Recognition of Notarizations Act, zipped through the infamously gridlocked senate last week on a unanimous vote. Sources suggested many members of the senate might have believed the bill covered fairly routine matters (most financial bills by contrast are extremely long) and that it had been vetted by the senate judiciary committee. They pointed out that there was no controversy surrounding the bill in the House, where it also passed easily on a voice vote in April. The question remains as to what degree the lawmakers pushing its passage last week sought to keep the bill under the radar.
The bill was introduced in October of last year by Republican Representative Robert Aderholt. In the senate, Judiciary Committee Chairman Patrick Leahy, a Vermont Democrat, reportedly sped the bill’s passage last Monday, after being pressed by “constituents,” he told Reuters. Republican Senator Jeff Sessions, also a member of the judiciary committee, helped Leahy move the bill to the floor for the vote.
Consumer advocates said the bill would have, in effect, been another gift to big banks, as it has become clear that foreclosure paperwork processes had been greased and opened up to fraud as increasing numbers of loans were tied to high-risk investing. The legislation could have sped foreclosures at the expense of accuracy, putting homeowners at a disadvantage. Banks like J.P. Morgan Chase and Bank of America have been engaged in the flawed practices now being widely unearthed and reported upon in the national press. Electronic notarization signatures are at the heart of the fraud.
With banks appearing to be on the hook again for vast sums tied to the foreclosure notarizations fraud, analysts are suggesting vital confidence in the markets will suffer another blow, extending the recession by months or more.
An earlier version of this story reported that the bill passed in the senate on the “last day of the session.” In fact the bill passed Monday, Sept 27, and the session ended Wednesday. Thanks to our reader-fact checkers for pointing out the error.