Dear NACBA Member,
No doubt you have seen media reports about H.R. 3808, the “Interstate Recognition of Notarization Act,” which would have required every state to recognize notarizations that are made lawful by any single state. This bill, first introduced in 2005 by Rep. Robert Aderholt (R, AL), was passed by the House earlier this year and then curiously resurrected on the Senate floor the day before Congress recessed for the midterm election campaign. After reviewing the bill, it was determined that NACBA should encourage President Obama to veto it because of the bill’s potential to weaken homeowners’ defenses to wrongful foreclosures, undermine the integrity of judicial proceedings, and because it appears to be a solution in search of a problem.
We had entered into conversations with officials from Congress, the Administration and among the allies with whom we have worked so closely on foreclosure-related issues. We had drafted a letter to be sent by NACBA and our allies to President Obama encouraging him to veto the bill, but that letter was preempted by the announcement from the White House that the President would pocket-veto the bill. So, we turned the letter into a “thank you” of sorts, with a plea for the Administration to take stronger foreclosure prevention steps, including supporting changes to the bankruptcy law to allow for modification of mortgages in bankruptcy. The text of that letter, delivered today to the White House, is below.
Maureen Thompson, NACBA Legislative Director
October 8, 2010
President Barack Obama
The White House
Washington, DC 20500
Dear Mr. President,
We are writing to thank you for your decision not to sign H.R. 3808, the “Interstate Recognition of Notarization Act.” As you have recognized, now is not the time to loosen protections against fraud in the foreclosure process; it is a time to strengthen them.
The bill would have required any court to recognize notarizations that are made lawful by any single state. While legal experts continue to examine the implications of the proposed language, the concern is that the bill may have permitted a state to loosen notarization requirements to make lawful questionable practices, such as notarizing documents not signed in the presence of the notary or notarizing documents signed by someone with purported authority to sign on behalf of another. We want to be sure to avoid a situation where a state would be in the position to export bad practices to other states, much as certain states have eliminated usury laws in order to attract the business of the credit card industry, thereby undermining the protections instituted by other states and resulting in a “race to the bottom.”
Furthermore, while the language in H.R. 3808 has the potential to undermine the integrity of judicial proceedings, it also appears to be the proverbial “solution in search of a problem.” Litigators report that they are unaware of problems with any court accepting out of state notarizations.
In closing, we note that the systemic problems in the foreclosure system require a much greater government response than has been taken thus far. There should be a national moratorium on all foreclosures until regulators and other agencies can ensure that mortgage servicers are complying with all applicable laws, regulations, and contractual requirements, and these problems should lead us to renew efforts to find a more effective way to prevent unnecessary foreclosures. Many powerful solutions have been proposed, such as requiring servicers to evaluate homeowners for loan modifications prior to foreclosure, or permitting bankruptcy judges to modify mortgages for a family’s primary home. We hope those solutions can be explored in a serious way to help America’s struggling homeowners, housing market, and the economic recovery.
Americans for Financial Reform
Center for Responsible Lending
Leadership Conference on Civil and Human Rights
Missourians Organizing for Reform and Empowerment
National Association of Consumer Bankruptcy Attorneys
National Community Reinvestment Coalition
National Consumer Law Center (on behalf of its low income clients)
National Council of LaRaza
National Fair Housing Alliance
National People’s Action
Neighborhood Economic Development Advocacy Project