RPT-Bank foreclosure cover seen in bill at Obama's desk
(Repeats item that ran Wednesday to further subscribers)
* Bill may give legal cover to banks, mortgage processors
* Senate quietly passed after many failed attempts
* Ohio Secretary of State calls timing "suspicious"
By Scot J. Paltrow
WASHINGTON, Oct 6 (Reuters) - A bill that homeowners advocates warn will make it more difficult to challenge improper foreclosure attempts by big mortgage processors is awaiting President Barack Obama's signature after it quietly zoomed through the Senate last week.
The bill, passed without public debate in a way that even surprised its main sponsor, Republican Representative Robert Aderholt, requires courts to accept as valid document notarizations made out of state, making it harder to challenge the authenticity of foreclosure and other legal documents.
The timing raised eyebrows, coming during a rising furor over improper affidavits and other filings in foreclosure actions by large mortgage processors such as GMAC, JPMorgan (JPM.N) and Bank of America (BAC.N).
Questions about improper notarizations have figured prominently in challenges to the validity of these court documents, and led to widespread halts of foreclosure proceedings.
The legislation could protect bank and mortgage processors from liability for false or improperly prepared documents.
The White House said it is reviewing the legislation. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
FACTBOX-U.S. foreclosure problems snowball [ID:nN06278011]
Breakingviews-Homeowners shouldn't lose hope
Graphic foreclosures - link.reuters.com/gyw47n
Graphic mortgage fraud - link.reuters.com/zes35n
Graphic metro area foreclosures -
"It is troubling to me and curious that it passed so quietly," Thomas Cox, a Maine lawyer representing homeowners contesting foreclosures, told Reuters in an interview.
A deposition made public by Cox was what first called attention to improper affidavits by GMAC. Since then, GMAC, JPMorgan and others have halted foreclosure actions in many states after acknowledging that they had filed large numbers of affidavits in which their employees falsely attested that they had personally reviewed records cited to justify the foreclosures.
Cox said the new obligation for courts to recognize notarizations of documents filed by big, out-of-state companies, would make it more difficult and costly to challenge the validity of the documents.
The law, the "Interstate Recognition of Notarizations Act," requires all federal and state courts to recognize notarizations made in other states.
The law specifically includes "electronic" notarizations stamped en masse by computers. Currently, only about a dozen states allow electronic notarizations, according to the National Notary Association.
"CONSTITUENTS" PRESSED FOR PASSAGE
After languishing for months in the Senate Judiciary Committee, the bill passed the Senate with lightning speed and with hardly any public awareness of the bill's existence on Sept. 27, the day before the Senate recessed for midterm election campaign.
The bill's approval involved invocation of a special procedure. Democratic Senator Robert Casey, shepherding last-minute legislation on behalf of the Senate leadership, had the bill taken away from the Senate Judiciary committee, which hadn't acted on it.
The full Senate then immediately passed the bill without debate, by unanimous consent.
The House had passed the bill in April. The House actually had passed identical bills twice before, but both times they died when the Senate Judiciary Committee failed to act.
Some House and Senate staffers said the Senate committee had let the bills languish because of concerns that they would interfere with individual state's rights to regulate notarizations.
Senate staffers familiar with the judiciary committee's actions said the latest one passed by the House seemed destined for the same fate. But shortly before the Senate's recess, Judiciary Committee Chairman Patrick Leahy pressed to have the bill rushed through the special procedure, after Leahy "constituents" called him and pressed for passage.
The staffers said they didn't know who these constituents were or if anyone representing the mortgage industry or other interests had pressed for the bill to go through.
These staffers said that, in an unusual display of bipartisanship, Senator Jeff Sessions, the committee's senior Republican, also helped to engineer the Senate's unanimous consent for the bill.
Neither Leahy's nor Session's offices responded to requests for comment Wednesday.
In background interviews, several Senate staffers denied that it would have any adverse effect on the legal rights of homeowners contesting foreclosures, and said the law was intended only to remove an impediment to interstate commerce.
Ohio Secretary of State Jennifer Brunner told Reuters in an interview that the law would weaken protection of homeowners by requiring many states to accept lower standards for notarizations.
She said it was "suspicious" that the law unexpectedly passed just as the mortgage industry is facing possible big costs from having filed false or improperly notarized documents.
Notarizations are made by notaries licensed by individual states. The purpose of notarizations is to attest to the identity of the person whose signature is on a legal document.
For affidavits -- sworn statements filed in court cases -- the person who made the affidavit also is required to swear under oath before a notary that the affidavit is true.
In recent depositions in several foreclosure cases, GMAC and other mortgage processors' employees have testified that they signed large numbers of affidavits without ever appearing before the individuals who notarized them.
The bill was first sponsored by Aderholt in 2006. He told Reuters in an interview that he proposed it because a court stenographer in his district had asked for it due to problems with getting courts in other states to accept depositions notarized in Alabama.
Aderholt said organizations of court stenographers supported the bill, but said he wasn't aware of any backing by banks or other business groups.
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