Add another item to the list of reasons that bankers are irate with President Barack Obama. The leader of the free world today refused to sign into law a bill that would have made it harder for homeowners to challenge foreclosure proceedings against them.
The bill quickly passed through the Senate without debate by unanimous consent on the day before the deliberative body adjourned for the midterm elections. Called the Interstate Recognition of Notarizations Act of 2009, it would have loosened restrictions on the kinds of notarized documents state and federal courts would accept, including documents that are signed electronically.
Existing restrictions on the kinds of documents that courts will accept are at the heart of a growing scandal concerning hastily compiled foreclosure documents whose legality is now being challenged in many states. Among the reported transgressions by lenders like JPMorgan Chase, Bank of America and GMAC are the notarization of documents at locations far away from their origin, forged signatures and “robo-signers,” teams of people that sign documents without reviewing them thoroughly, as the law requires.
JPMorgan Chase, BofA and GMAC have suspended foreclosure operations in 23 states to review the legality of their document preparation, and attorneys general and other politicians are increasingly calling for investigations into lenders’ foreclosure practices. U.S. Attorney General Eric Holder has said he will put the Department of Justice on the case.
The wrangling that will ensue promises to draw out the process of moving houses through the market as home prices continue their three-year search for a bottom.