President Obama will not sign a foreclosure bill that would have made it easier for banks to process foreclosures on homes, the White House announced on Thursday.
The legislation, passed by the House in April and the Senate in September, would have allowed federal and state courts to recognize documents that were notarized in other states, including those that contain electronic signatures. The proposal would have cleared up court congestion and expedited the process of selling foreclosed homes, which would, in turn, have helped the housing market recover more quickly.
Banks are expected to take over a record 1.2 million homes this year, up from about 1 million last year, according to RealtyTrac, a firm that monitors the foreclosure market.
The President, however, is opposed to the bill, believing that it indirectly promotes foreclosure fraud through robo-signing , a practice that has emerged from the requirement that lending company analysts sign off on the paperwork that enables banks and mortgage lenders to repossess a foreclosed property. Many analysts sign thousands of documents a day, which gives them little or no time to properly review the documentation. The term “robo-signing” refers to lenders’ propensity to sign on the dotted line without reading what is written above it.
“Notarizations are important for a large range of documents, including financial documents,” Dan Pfeiffer, the White House communications director, said in a White House blog post explaining the President’s decision."We believe it is necessary to have further deliberations about the intended and unintended impact of this bill on consumer protections, including those for mortgages, before this bill can be finalized."
Obama’s refusal to sign the bill is technically considered a pocket veto, as Congress is out of session until after the Nov. 2 midterm elections and therefore cannot override his decision with a two-thirds vote from the House and Senate. Obama has used the pocket veto one-time before, but only because it was duplicative of other legislation.