Amid growing furor over the legitimacy of foreclosure proceedings, White House officials said Thursday that President Obama will not sign a bill passed by Congress without public debate after critics said the legislation could loosen standards for foreclosure documents.
The bill, named the Interstate Recognition of Notarizations Act, would require courts to accept document notarizations made out of state. Its sponsors intended to promote interstate commerce. But homeowner advocates warn the bill could allow lenders to cut even more corners as they seek to evict homeowners.
White House press secretary Robert Gibbs said the president did not believe Congress meant to undermine consumer protections regarding foreclosure challenges. Still, Obama will use a "pocket veto" on the bill, which will effectively kill it.
Democratic leaders on the Hill were scrambling to figure out how the legislation managed to sail through the House and Senate without any objection. The episode may prove embarrassing for Democrats, who in recent weeks have been calling for federal investigations into flawed paperwork, forged documents and other misconduct in foreclosure proceedings initiated by big lenders.
The House passed the bill in April by a voice vote, meaning there's no record of who voted for or against the legislation. The Senate passed the bill on Sept. 27, just before recess, without any debate.
Even the bill's main sponsor, Rep. Robert Aderholt (R-Ala.), was surprised by how quickly the legislation was greenlighted, according to D.J. Jordan, a representative for Aderholt.
Congressional staffers said lawmakers will revisit the bill to add protections for consumers.
Jordan said Aderholt had been working on the issue since April 2005, soon after hearing complaints from a court stenographer in his district that courts in other states were having trouble using documents notarized in Alabama.
"The authors of this bill no doubt had the best of intentions in mind when trying to remove impediments to interstate commerce," said Dan Pfeiffer, White House communications director. "We will work with them and other leaders in Congress to explore the best ways to achieve this goal going forward."
This would be Obama's second pocket veto. Last December, he killed a short-term resolution that turned out to be unnecessary for extending defense funding.
Obama's veto comes as the uproar over document processing from lawmakers, law enforcement and union officials and other stakeholders intensified on Thursday, turning the foreclosure mess into a political issue.
National civil rights groups, including the NAACP, National Council of La Raza and the Center for Responsible Lending, joined labor unions Thursday in calling for an immediate national moratorium on foreclosures.
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