Foreclosure Bill Is Blocked (Obama Plans His First Significant Veto...)

WSJ ^ | 9/8/10 | DAMIAN PALETTA

[paudio]

President Barack Obama plans to veto a bill whose opponents say would make it harder for homeowners to stop foreclosures.

The move marks the Obama administration's most direct intervention so far into a growing debacle tied to how banks foreclose on homes, and the first effective veto of Mr. Obama's presidency. The veto could make it more difficult for banks to complete paperwork and speed the foreclosure process, and could give homeowners more time to rework loans.

Several of the country's largest banks, including Bank of America Corp., J.P. Morgan Chase & Co. and Ally Bank, have moved in recent weeks to halt thousands of foreclosures in 23 states amid revelations that the banking industry had used "robo-signers," people who sign hundreds of documents a day without reviewing their contents.

[mware]

Stuart Varney was just on talking about it and he absolutely agrees with you.

This bill would shut down the entire housing system.

[Fee]

The issue is not about the slob borrower who was reckless, which I share your position on, but a separate issue dealing with the ability of the mortgage business and Fannie Mae/Freddie Mac encouraging the set up of an electronic system that will allow mortgage backed securities to be traded like stocks. Problem is it wrecked the manual system of recording the deed/clear title for the property. The bankers, mortgage companies and Freddie Mac and Fannie Mae set up a system where huge amount of money was made on fees, commissions and etc on the MERS exchange at the expense of the legal support documents involving the mortgagor and mortgagee. Foreclosure crisis is exposing this mess, but it also involves people who are making their mortgages on time but the note is sold to so many times they may not have a clear title when they try to refinance, sell their home or pay off their mortgage. In other words the gov set up an electronic system and did not supervise it, thus allowing bankers to concentrate on making money on the exchange and in the process neglect the proper paperwork/document process that is critical to the homeowner down the road.

[livius]

Thanks for that great explanation, dennisw.

But I’m still confused about this bill - it seems to me that what it was intended to do was accept as genuine and definitive the endorsements that existed on the documents at the time of the foreclosure, thus resolving the title issues and making it possible to proceed (foreclose, sell, or whatever).

So it doesn’t seem to me that Obama is doing anybody any favors in vetoing it. The bill received unanimous support from Congress because it was seen as something that would make the situation easier to resolve, but once again Obama is acting to make title something that is unclear and in fact, tenuous and uncertain, existing solely at the discretion of the government (which will ultimately become the owner of the houses).

I agree that the system may not have been good, but it seems to me that the bill was an attempt to simply stabilize things at a certain point and then move ahead.

[abb]

Your analysis may be accurate as far as the mechanics of the issue, but the larger societal implication is that profligates and deadbeats get another break while thrift and industry are penalized.

Every other point on this issue is insignificant.

[listenhillary]

At the same time he widens the enthusiasm gap.It is a good move, unless you are poor and under water on your loan.

Congress is horribly overstepping here. At the same time the CEO and officers of the banks perpetuating outright fraud with forged foreclosure documents should be heading to jail.

[abb]

Obama is merely doing what Marxists have done since forever - destroy capital.

[Rapscallion]

Brevity is courteous and cool.

[driftdiver]

What about the “larger societal” implications of allowing the banks to get away with committing crimes and destroying property ownership laws?

Is that significant?

[dennisw]

I would have though that bringing the foreclosure suit as the agent for the Note Owner would be straight forward, with the only problem being showing that the servicing agreement included the ability to act for the owner in this fashion.

The author also says the original note must be presented in foreclosure court proceedings. Not a copy of it. His experience is that the go go years of mortgage securitization were so sloppy that the original note usually cannot be produced in court

[listenhillary]

I don’t really understand the unanimous passing of a bill that seems to make it easier for banks to commit fraud. Unless they know how eff’d up the whole mess is and this is the only way out.

From the article

” It would have required state and federal courts to accept documents of many different kinds that are notarized by people or computers in other states. The House passed the bill in April by “voice vote” and the Senate passed it unanimously Sept. 27.”

[whitedog57]

It will be costly to repair and it will hurt the housing market.

But how do we fix it? Are pocket vetoes, moratoriums and investigations the solution? Or do we pass constructive legislation to solve the problem?

At some point, Congress better start to understand the intense damage that it does when calling for moratoriums and investigations, not to mention a pocket veto of legislation to fix a problem with Title transfers. Congress and the Administration knew about this problem back in 2007 but chose ignore it (the Deutsche Bank and Ohio default cases).

Obama and Congress should not be acting as Robocop seizing the opportunity to slow down foreclosures even more. This is will add greater uncertainty in the housing and mortgage markets at a time where we need to be restoring confidence. Not to mention that this will be extremely costly to banks which are in poor shape to begin with.

Of course, there is no mention of Fannie, Freddie and the FHA that were aware of the document and Title issue, yet chose to purchase and insure trillions of dollars of mortgages without examining or spot-checking to see if the Title exists. They continue on their merry ways under the banner of “stabilizing the housing market” while at the same terror terrifying investors and adding uncertainty to the housing market.

Notice that the moratorium and investigations do not require that the GSEs cease purchasing and insuring loans which may have document defects. Instead, the Robocop solution is to halt foreclosures but permit the government to intervene in terms of mortgage purchases and insurance. Of course, this is the government’s main agenda: keep people in their homes at all costs – to the banks and taxpayers. And that cost is growing at breakneck speed.

Someone is going to have to pay for the lost income to the banks (since moratoriums could last for several years) and the decline in mortgage securities caused by the failure to pass the Robo Legislation and the calls for moratoriums and investigations.

Why didn’t the government fix this problem back in 2007 when it surfaced?

[Fee]

The bill intend to loosen the state and local requirements for notarized documents used in the foreclosure process. It means banks who improperly filed affidavits and not sign the documents in the presence of a notary can now submit waive this requirement. Legal documentation procedures exist to protect all parties from false witness or fraud. The bill would allow the feds stepped in and legally bailout the banks when they were caught short cutting the process. This is a bad bill and the GOP is stupid to allow a member to sponsor it. The only that saves the GOP is many Dems supported it via voice vote.
The bill may seem like justice to save the banks from a technical challenge from homeowners who stop paying and trying to get out of foreclosures, but it also protects banks from being held accountable for sloppy and improper documentation if a homeowner has a dispute with the bank on other mortgage matters such as who is responsible for the lost title in the MERS. Lost titles is the next mortgage volcano to explode as the electronic exchange was designed to collect fees, collect payment from buyers and pay sellers as the mortgage notes are sold like stocks on an exchange. Wall Street is good at paying and collecting fees but recent disclosures indicate they were poor and sloppy at transferring essential property documents as the mortgage changed hands electronically.

[snowsislander]

I think some people might be confusing this loathesome and stupid bill with some of the other related legislation.

This nasty bill forces every court to accept a digitally notarized legal instrument. It also forces every court to accept digital notarizations from every locality, whether or not they want to. It is a horrible and stupid extension to the "Electronic Signatures in Global and National Commerce Act" passed back in 1998.

Here's the text of the legislation being vetoed:

H.R.3808 -- Interstate Recognition of Notarizations Act of 2010 (Enrolled Bill [Final as Passed Both House and Senate] - ENR)

--H.R.3808--

H.R.3808

One Hundred Eleventh Congress

of the

United States of America

AT THE SECOND SESSION

Begun and held at the City of Washington on Tuesday,

the fifth day of January, two thousand and ten

An Act

To require any Federal or State court to recognize any notarization made by a notary public licensed by a State other than the State where the court is located when such notarization occurs in or affects interstate commerce.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the `Interstate Recognition of Notarizations Act of 2010'.

SEC. 2. RECOGNITION OF NOTARIZATIONS IN FEDERAL COURTS.

Each Federal court shall recognize any lawful notarization made by a notary public licensed or commissioned under the laws of a State other than the State where the Federal court is located if--

(1) such notarization occurs in or affects interstate commerce; and

(2)(A) a seal of office, as symbol of the notary public's authority, is used in the notarization; or

(B) in the case of an electronic record, the seal information is securely attached to, or logically associated with, the electronic record so as to render the record tamper-resistant.

SEC. 3. RECOGNITION OF NOTARIZATIONS IN STATE COURTS.

Each court that operates under the jurisdiction of a State shall recognize any lawful notarization made by a notary public licensed or commissioned under the laws of a State other than the State where the court is located if--

(1) such notarization occurs in or affects interstate commerce; and

(2)(A) a seal of office, as symbol of the notary public's authority, is used in the notarization; or

(B) in the case of an electronic record, the seal information is securely attached to, or logically associated with, the electronic record so as to render the record tamper-resistant.

SEC. 4. DEFINITIONS.

In this Act:

(1) ELECTRONIC RECORD- The term `electronic record' has the meaning given that term in section 106 of the Electronic Signatures in Global and National Commerce Act (15 U.S.C. 7006).

(2) LOGICALLY ASSOCIATED WITH- Seal information is `logically associated with' an electronic record if the seal information is securely bound to the electronic record in such a manner as to make it impracticable to falsify or alter, without detection, either the record or the seal information.

Speaker of the House of Representatives.

Vice President of the United States and

President of the Senate.

This is ridiculous, and it is fraught also with all kinds of technical problems. Even good faith signing efforts from 1998 when the Electronic Signatures law went into effect are now completely vulnerable to advances in cryptography.

[listenhillary]

from the article

“The bill being vetoed, HR 3808, passed the House and the Senate unanimously, and wasn’t debated in either chamber.”

Getting paid $175K a year to not read bills I suppose.

[Hoodat]

Mr. Obama will send the bill back to Congress using a process known as a "pocket veto."

This is not a "pocket veto". A pocket veto is a term to describe what happens when the President takes no action and Congress is adjourned. When this happens, the bill does not become law. So it is the same as if he had vetoed it.

Now when the President takes no action and Congress is not adjourned, then the bill does become law. Again, it requires no action on the President's part. In a nutshell, it is the same as a Legislator voting 'Present'. It requires no courage or leadership. In essence, it is exactly what I would expect from Barack Hussein Obama.

[VRW Conspirator]

bump for later

[chenpeng]

Cool~

[Talf]

the ‘mortgage backed securities’ industry
is bad for our country.

this is a bad bill

[abb]

There is no “property ownership” until the mortgage is paid in full. Somehow, the debate has been shifted to the point that occupation of property equals equity.

Ain’t so.

99 and 44/100 percent of these issues would be headed off if the borrower merely adheres to the terms of the contract. That is to say if you pay your debts, there are no problems.

[LizardQueen]

The big issue in this bill, as I understand it, is the forcing of states to accept notarizations from out of state where they can’t be verified. This bill was pushed through as cover for the “Robosigner” mess that is currently happening with the foreclosures.

Check out Denningers Market-Ticker - he’s all over it.