Is the Senate Trying to Protect Banks That Commit Foreclosure Fraud?

By Donny Shaw for OpenCongress

Oct. 7, 2010

A strange thing hap pened in the Sen­ate last week. After years of re ject ing the House’s at tempt to pass the “In­ter state Recog ni tion of No ta riza tions Act” that would force states to ac cept out-of-state no ta riza tions of doc u­ments, in clud ing elec tron ic no ta riza­tions, the bill was sud den ly dis charged from com mit tee, called up on the Sen­ate floor, and quick ly passed under unan i mous con sent. Even the bill’s spon sor, Rep. Robert Ader holt [R, AL-4], said that he was “sur prised that it came through at the eleventh hour.” No body ex pect ed the bill to come up for Sen ate pas sage, but since it seemed in nocu ous enough and be cause sen a tors were itch ing to get out of D.C. and hit the cam paign trails, they passed it with out any de bate or dis sent.
Luck i ly, Ohio Sec re tary of State Jen nifer Brun ner had her wits about her and has raised a red flag:

When I learned of it last Thurs day, it sound ed in nocu ous to me, but then I start ed look ing at the tim ing of the bill. GMAC, owned by Ally, had just sus­pend ed its fore clo sure ac tions in 23 states, in clud ing Ohio. I had al ready re­ferred Chase Home Fi nance, LLC, on Au gust 23, 2010, to the U.S. De part­ment of Jus tice, ask ing it to re view and in ves ti gate Chase’s doc u ment no­ta riza tion prac tices in home fore clo sures (18,000 doc u ments per month were being no ta rized by 8 peo ple, along with other ir reg u lar i ties). I li cense no taries in the State of Ohio. Even though I don’t have the power under state law to in ves ti gate or pros e cute, I couldn’t stand idly by with out act­ing. That’s why I’m ask ing you to email or call the Pres i dent at 202-456-1111 to ask him not to sign the bill.
Last Wednes day, the day be fore I an nounced the DOJ re fer ral, JP Mor gan Chase an nounced it was hav ing third party coun sel re view its doc u ment pro ce dures for fore clo sures. Just two days be fore, the U.S. Sen ate had rushed through H.R. 3808. Some thing didn’t seem right. Since then oth ers agree with me.
No ta riz ing a doc u ment re quires the sign er to make a fun da men tal state­ment, an ac knowl edg ment, be fore a no tary pub lic. It is used for doc u ments of great sen si tiv i ty or value, like when the title of a car is trans ferred on its sale or when a bank tells a court how much is owed on a note for a mort gage when it wants to fore close.
Some states have adopt ed “elec tron ic no ta riza tion” laws that ig nore the re quire ment of a sign er’s per son al ap pear ance be fore a no tary. A no tary’s sig na ture is that of a trust ed, im par tial third party, whose no ta riza tion bol­sters the in tegri ty of the doc u ment. Many of these poli cies for elec tron ic no ta riza tion are driv en by tech nol o gy rather than by prin ci ple, and they are dan ger ous to con sumers.

In other words, just as more in for ma tion is be com ing known about cer tain banks’ lax and fraud u lent doc u ment ing prac tices in their bulk fore clo sure op er a tions (and as House Dems are start ing to call for in ves ti ga tions), this bill may have been rushed through in order to pro tect banks from li a bil i ty and force states to ac cept forged fore­clo sure af fi davits as valid. As soon as it takes ef fect, all the robo-signed af fi davits that are being con test ed would in stant ly be con sid ered valid under fed er al law. Fur ther­more, it could set off a race to the bot tom, where in states at tract busi ness by out do­ing each other in lax no ta riza tion stan dards and banks look ing to fore close on cus­tomers across the coun try rush in to avoid the stricter stan dards in other states. So, in Mas sachusetts, the law might re quire a fin ger print next to each sig na ture on no ta rized doc u ments and en force ment might be high ly reg u lat ed, but in Flori da it may be com­mon prac tice to send off a stack of doc u ments to be e-signed by a no tary in bulk. If I’m a na tion al bank look ing to fore close on thou sands of prop er ties that I can’t seem to prove that I ac tu al ly pos sess the right to fore close on be cause of all the com plex se cu ri­ti za tion I did in 2006, I would go to Flori da to have my doc u ments cer ti fied.
Is it just co in ci dence that this bill was rushed through last week, or is this an ex am ple of a bought-out Sen ate pro tect ing their fun ders (i.e. the big banks)? There needs to be some more in ves ti ga tion to find out defini tive ly, but this cer tain ly does seem fishy to say the least. Reuters de scribes what went on in the Sen ate and where we might begin look ing to dig in deep er:

After lan guish ing for months in the Sen ate Ju di cia ry Com mit tee, the bill passed the Sen ate with light ning speed and with hard ly any pub lic aware­ness of the bill’s ex is tence on Septem ber 27, the day be fore the Sen ate re­cessed for midterm elec tion cam paign.
The bill’s ap proval in volved in vo ca tion of a spe cial pro ce dure. Demo crat ic Sen a tor Robert Casey, shep herd ing last-minute leg is la tion on be half of the Sen ate lead er ship, had the bill taken away from the Sen ate Ju di cia ry com­mit tee, which hadn’t acted on it.
The full Sen ate then im me di ate ly passed the bill with out de bate, by unan i­mous con sent.
The House had passed the bill in April. The House ac tu al ly had passed iden­ti cal bills twice be fore, but both times they died when the Sen ate Ju di cia­ry Com mit tee failed to act.
Some House and Sen ate staffers said the Sen ate com mit tee had let the bills lan guish be cause of con cerns that they would in ter fere with in di vid u al state’s rights to reg u late no ta riza tions.
Sen ate staffers fa mil iar with the ju di cia ry com mit tee’s ac tions said the lat­est one passed by the House seemed des tined for the same fate. But short ly be fore the Sen ate’s re cess, Ju di cia ry Com mit tee Chair man Patrick Leahy pressed to have the bill rushed through the spe cial pro ce dure, after Leahy “con stituents” called him and pressed for pas sage.
The staffers said they didn’t know who these con stituents were or if any­one rep re sent ing the mort gage in dus try or other in ter ests had pressed for the bill to go through.
These staffers said that, in an un usu al dis play of bi par ti san ship, Sen a tor Jeff Ses sions, the com mit tee’s se nior Re pub li can, also helped to en gi neer the Sen ate’s unan i mous con sent for the bill.
Nei ther Leahy’s nor Ses sion’s of fices re spond ed to re quests for com ment Wednes day.

So, Sen. Robert Casey [D, PA], Sen. Pat Leahy [D, VT], and Sen. Jeff Ses sions [R, AL].
For the mo ment, all eyes are on Obama, who is now in charge of de cid ing whether to sign this bill into law or send it back to Congress with a veto. A de ci sion could be made as soon as today.
UP DATE: Whie Huse spokesman Robert Gibbs tells Huff Po that they have “con cerns”about the bill and will be re leas ing a more defini tive state ment later this af ter noon.Meme o ran dum rounds up all the com men tary.
UP DATE 2: Pres i dent Obama has an nounced that he will not sign the bill into law. “We need to think through the in tend ed and un in tend ed con se quences of this bill on con­sumer pro tec tions, es pe cial ly in light of the re cent de vel op ments with mort gage pro­ces sors.”