House Will Vote To Override Obama’s Veto Of Bill Making It Harder For Homeowners To Challenge Banks

In October, the House and Senate quietly passed a bill — the Interstate Recognition of Notarizations Act of 2010 — that would have forced states to accept notarized documents from any state. This came at the same time that the robo-signing scandal was finally coming into focus, and one of the problems that the banks were having with their documentation was a slew of false and possibly fraudulent notarizations.

At the time, Ohio Secretary of State Jennifer Brunner said that the bill “would weaken protection of homeowners by requiring many states to accept lower standards for notarizations.” President Obama, warning of the “unintended consequences of this bill on consumer protections, especially in light of the recent developments with mortgage processors,” vetoed the legislation.

Congress is not a body that actually stands up to the banking industry with any consistency, so the House today will be voting to override Obama’s veto. But nothing has changed the fact that the bill would make it more difficult for homeowners to challenge foreclosures (as any notarization, done under any standard, would have to be accepted). Zach Carter explains:

In foreclosure fraud, this is important because banks are robo-signing documents in order to cover-up problems with their loan documentation. In the GMAC scandal that ignited the recent controversy, a robo-signer named Jeffrey Stephan had hundreds of thousands of these documents notarized in Pennsylvania, even though they concerned foreclosure cases all over the country. If courts have to accept out-of-state notarizations, it becomes much more difficult to demonstrate that GMAC is committing rampant fraud.

In addition, forcing any state to immediately accept notarized documents from out of state could also lead to a race to the bottom, as banks will originate all their documents in states that have the loosest standards. It would only take one state significantly lowering its standards (in the face of bank lobbying or the promise of banks moving jobs into the state) and suddenly homeowners would have to accept bank documents with no idea whether the information on them was verified properly by an impartial observer.


As the Wall Street Journal reported, “it isn’t clear how much the foreclosure mess, which erupted in mid-September, could affect support for the measure among House lawmakers who voted for the bill last spring.” The House needs to abandon this terrible idea once and for all.