Obama Rejects Notary Bill Amid Foreclosure `Caution'

President Barack Obama won’t sign legislation that critics said would have eased the way for banks to process home foreclosures, his spokesman said.

The bill would have required courts to recognize notarizations across state lines, including electronic signatures. White House press secretary Robert Gibbs said the administration was concerned about the potential impact on home foreclosure proceedings.

“Out of an abundance of caution, and to ensure that those unintended consequences don’t harm consumers, the president will send the bill back,” Gibbs said.

Obama’s “pocket veto” puts to an end, for now, a five- year effort by some of the nation’s 4.8 million notaries to streamline court proceedings involving notarized documents. The Interstate Recognition of Notarizations Act for years had won approval from Democrats and Republicans in Congress as a piece of mundane, good-government legislation.

The measure was approved by the House without fanfare in 2006 and 2007 only to languish in the Senate. The bill from Representative Robert Aderholt, an Alabama Republican, passed the Senate Sept. 27 by unanimous consent and drew attention this week when Ohio Secretary of State Jennifer Brunner sent out a campaign fund-raising e-mail calling the bill “dangerous” and urging Obama not to sign it.

In her e-mail, Brunner said the Senate approved the bill just as banks suspended hundreds of thousands of foreclosures after borrowers and courts raised questions about signatures on legal documents.

Timing

“It sounded innocuous to me, but then I started looking at the timing of the bill,” Brunner wrote in her Oct. 5 e-mail.

Ally Financial Inc., JPMorgan Chase & Co. and Bank of America Corp. have suspended foreclosures or evictions in 23 states where courts have jurisdiction over home seizures. At least seven state attorneys general are looking into the issue, and the companies are reviewing affidavits and other loan documents that might have been signed without being examined first.

Notaries public administer oaths and serve as an impartial witness when documents are signed. They are governed by state law, and lawfully notarized documents in one state are not always recognized by others. Questions about the validity of notaries also have been raised in foreclosures.

Coincidence

Aderholt sponsored the legislation after a constituent, a court stenographer, relayed issues he had heard time and again during trials, spokesman Darrell Jordan said.

“It is purely coincidence that this whole bank notarization fraud comes up now,” Jordan said in a telephone interview.

Timothy Reiniger, who worked on the legislation as executive director of the National Notary Association in Chatsworth, California, said he is disappointed at the furor it has aroused.

“Notary issues don’t tend to get a lot of interest,” Reiniger said in a phone interview from Richmond, Virginia, where he is now director of the digital services group at the firm FutureLaw. “It’s totally coincidental. It had nothing to do with banks.”

Senate Judiciary Committee Chairman Patrick Leahy, a Vermont Democrat, had supported the bill after being buttonholed by notaries at a September event in Washington honoring Calvin Coolidge, a U.S. president from Vermont and the only one sworn into office by a notary public.

No Objections

No lawmakers had objected to the legislation, Leahy said in a written statement.

“Now that concerns have been raised, Congress should re- examine whether this bill might have had an unintended impact on foreclosures,” Leahy said.

When Congress is adjourned, as it is now, the president may withhold his signature on legislation to prevent it from becoming law. Obama last used a pocket veto on Dec. 30, 2009, for an appropriations bill that was rendered unnecessary by subsequent legislation, according to the White House.

To contact the reporters on this story: Lorraine Woellert in Washington at lwoellert@bloomberg.net; Nicholas Johnston in Washington at njohnston3@bloomberg.net

To contact the editors responsible for this story: Mark Silva at msilva34@bloomberg.net; Larry Roberts at lroberts13@bloomberg.net

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