Breaking News Alert: President Obama will not sign foreclosure measure, says official 
October 7, 2010 1:38:33 PM
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Obama won’t sign bill that would affect foreclosure proceedings


Thousands of foreclosures are put on hold
 
During the housing boom, millions of homeowners got easy access to mortgages. Now, some mortgage lenders and state governments have discovered many mortgage documents were mishandled.

By Jia Lynn Yang and Ariana Eunjung Cha
Washington Post Staff Writers 
Thursday, October 7, 2010; 4:48 PM


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.

"If we don’t take drastic measures now, we can expect millions of additional foreclosures in the coming years, with a disproportionate number of them involving Latino and African American families," Wade Henderson, president of the Leadership Conference on Civil Rights, said in a statement.

Sen. Sheldon Whitehouse (D-R.I.) also called for a national foreclosure moratorium on Thursday, while Michigan Democratic gubernatorial candidate Virg Bernero stunned an audience in Detroit with a forceful challenge to banks to halt home foreclosures in Michigan. Bernero vowed to withdraw $1 billion in state money from J.P Morgan and Chase banks because they have refused to ease up on foreclosures – an idea that is likely please the United Autoworkers of America, which has also been critical of J.P. Morgan Chase.

As many as 40 state attorneys general are joining together to coordinate investigations into the foreclosure paperwork problem.

Patrick Madigan, the Iowa assistant attorney general who is the chairman of the group, said in an interview that they have begun to call lenders to try to ascertain the scope of the problem. He said companies that have known issues with affidavits should broaden their foreclosure moratoriums beyond the 23 states that require a court to foreclose.

"We intend to fully investigate and get to the bottom of this and find out how many companies have this issue, and for those that do to remedy the situation," Madigan said.

Also on Thursday, Iowa Attorney General Tom Miller called on three large mortgage lenders to freeze foreclosures in the state and said Iowa will take the lead in coordinating with other states investigating allegations of mishandled foreclosures.

He urged other firms with "with anything less than absolute confidence in its internal foreclosure review procedures" to also stop foreclosures.

"There appears to be an emerging pattern of careless and perhaps cavalier attitudes by a growing number of lenders when it came to the seriousness of the foreclosure process," Miller said.

The nation’s banks are also being pressured by investors.

Chris Katopis, executive director of the Washington-based Association of Mortgage Investors, said securities trustees should "audit and review the resulting losses to hold servicers accountable for negligence in maintaining the assets of trusts."

"We are afraid that people’s pensions and retirement savings are being impacted," Katopis said in an interview Thursday. "Investors are deeply concerned about possible documentation inconsistencies related to mortgages. It is vital that trustees promptly address these matters."

Staff writer Scott Wilson contributed to this report.
 
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Amid growing furor over the legitimacy of foreclosure proceedings, a White House official said President Obama will not sign a two-page bill passed by lawmakers without public debate after details emerged that the legislation could loosen standards for foreclosure documents.
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