The hottest story right now in the banking industry is foreclosure-gate, as various firms like Bank of America, JPMorgan, and GMAC have halted foreclosures upon realising that the paperwork behind them has been shoddy at best.
The fallout — which has already invited investigations from state AGs — could throw a major wrench into what’s already been a costly, tedious, and economically damaging process.
Seemingly out of nowhere, the Senate passed a bill that could get the banks out of this mess.
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.
What is the bill?
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.
Even the bill’s own House sponsor is stunned by the speed with which this bell went through.
So now it’s on the President’s desk to sign. ZeroHedge, which brought the story to our attention, is sceptical that he will. But vetos are rare. The path of least resistence is usually to just sign the bill and move on.