How Come No One Has Ever Heard of This?

Does anyone know wtf is going on with this:

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 and Bank of America.

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.

Is this for real? Are they seriously going to make this sort of shit legal?

Is this a hoax?

*** Update ***

Bill is real, and the language seems innocuous, but could have the effect described in the Reuters piece. D-Day at FDL is working on it, so we shall see what comes up in the next few hours.

More here from ProgressOhio.

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159 replies
  1. 1
    D-Chance. says:

    Well, it sailed through a Democrat controlled House, and a Democrat controlled Senate… so it MUST be good!

  2. 2
    Perry Como says:

    Ummm, holy shit? I follow this mortgage crap pretty closely and this is the first I’ve ever heard of it.

  3. 3
    Jim, Foolish Literalist says:

    hortly 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.[…]
    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.

    Okay, time to call the White House, I think.

  4. 4
    Jamie says:

    seems when things can’t get any worse they suddenly do.

  5. 5

    I read about this today but I don’t remember where.

    Does anybody have a source that is close enough to the action to really know what is going on?

    I thought that it might be an effort to prevent absolute paralysis of the whole mortgage industry. [Why give a mortgage if you can’t foreclose?]

    The current problem with foreclosures was brought about, of course, by shopping mortgages and then slicing and dicing, etc.

    But I really don’t know what is going on.

  6. 6
    MikeJ says:

    I pray for some 11D “let the republican bill go through so I can veto it” but I always knew that Obama was a moderate republican (which at the time was a far better choice than the right wing extremist he was running against.)

  7. 7
    Sentient Puddle says:

    I’m trying to find the text of the bill. Anyone happen to have an actual number to search for? And why can’t they include things like those in articles?

  8. 8
    Bob Loblaw says:

    The one hand washes the other, motherfuckers. The one hand washes the other.

  9. 9
    mr. whipple says:

    Totally OT, but fuck the Yankees.

    That is all.

  10. 10
    Nick says:

    @Sentient Puddle:

    And why can’t they include things like those in articles?

    you want journalists to read things? ugh. I have a three martini lunch to go to before a social event later on and at some point I got to find time to look like I know shit on TV.

  11. 11
    General Stuck says:

    Even usual good libtard NE Senators have to be watched when it comes to anything to do with the banking and finance industry. But this sounds really bizarre to me, like maybe there is part of the story not being reported yet, that would mitigate the seeming insanity of such a law.

  12. 12
    slag says:

    Wait a second. Is this an actual instance of useful, substantive reporting? Not buying it. I call shenanigans.

  13. 13
    MikeJ says:

    @Sentient Puddle: HR 3808, The Interstate Recognition of Notarizations Act of 2010.

  14. 14
    Steve says:

    Here is what the bill says:

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

  15. 15
    slag says:

    @MikeJ: Hmmm…

    Apr 27, 2010: This bill passed in the House of Representatives by voice vote. A record of each representative’s position was not kept.
    __
    Sep 27, 2010: This bill passed in the Senate by Unanimous Consent. A record of each senator’s position was not kept.

  16. 16
    JMY says:

    @MikeJ:

    With the prez’s luck, he’d veto it, just for Congress to override it.

  17. 17
    KG says:

    @Sentient Puddle: “Interstate Recognition of Notarizations (IRON) Act of 2009” (HR 3808)

    From Rep Aderholt’s website. Looking it up now…

    ETA: Language here

  18. 18
    Sentient Puddle says:

    @MikeJ: Thanks much. This really shouldn’t be too much to ask for in articles like this, should it?

  19. 19
    John Bird says:

    Read, like, anything ever by Matt Taibbi. There’s a bit in The Great Derangement where he reports on how Joe Barton rushed that bill through committee that deregulated oil refinery pollution, under the auspices of relief for the victims of Hurricane Katrina, while bloated bodies floated around New Orleans. Balls the size of Jupiter.

    Yes, it’s happening, yes, the Democrats do it too, yes, we’re fucked.

  20. 20
    MikeJ says:

    @mr. whipple: Fuck the Yankees is *always* on topic.

  21. 21
    KG says:

    Not sure this is a big deal. Full faith and credit type stuff. Though I’m not sure Section 3 is constitutional. Not sure the federal government can tell the states what their evidentiary rules should be.

  22. 22
    MattR says:

    Maybe I am trying too hard to find the silver lining, but doesn’t this bill essentially say that a judge in Florida has to treat documents notarized in Maryland the same as documents notarized in Florida? I understand that different states have different standards and different degrees of regulation, but I don’t see how this would stop a court from throwing out documents if there is evidence of fraud or impropriety from the notary.

  23. 23
    KG says:

    I’d also point out, when it comes to the rules of evidence and what this law says, I’m not sure it does anything bad. It says the Courts shall “recognize” the document. It doesn’t create a presumption (rebuttable or otherwise) that the document is correct or true or anything other than that it exists. This just says if it’s notarized in another state, it should be considered a valid notarization. There are ways to challenge the validity of a notarization. There are also evidentiary rules that will still come into play. It’s not going to stop depositions or discovery.

  24. 24
    Rudy says:

    There’s also a letter from Ohio Sec of State Jennifer Brunner on this.

    Interesting.

  25. 25

    @Steve: That still doesn’t wipe away fraud. Which is what’s going on. Or am I missing something.

  26. 26
    Steve says:

    @KG: It doesn’t say they have to admit it as evidence. It just says they have to recognize it as a lawfully notarized document.

    I don’t think this is a huge deal. It doesn’t legalize fraud or anything. Obviously, the way Big Business can get a bill passed in a heartbeat while everyone else has to stand in line is galling.

    It sounds like the main issue involves electronic notarizations (I’m admitted to practice in 4 states, and I’ve never even heard of this). Let’s say some state makes a conscious decision not to allow electronic notaries, because regular old in-person notaries are a better anti-fraud mechanism. This law would force them to accept the lower standard. But I can’t really say that’s a big deal without understanding whether electronic notaries are really problematic.

    Here’s the thing. The sole function of a notary is to guarantee that the person who signs an affidavit is the person whose name appears on the affidavit. If there are 10,000 affidavits, all signed by the same officer of a corporation, no purpose is served by making a human notary stand there and verify each and every one of the signatures. Under any set of rules, if the statements in the affidavit are false, it’s the corporate officer who signed them that bears responsibility for the perjury. It’s not like the notary goes through the affidavit and fact-checks it.

  27. 27
    John Bird says:

    Look, stop this conspiracy theory crap. Democrats, doing something bad for a corporate ally? Doing it in secret? You know what that smells like to me? A wacky conspiracy theory. I bet the UFOs paid them to do it, John. When are we going to stop getting all these conspiracy theories from you? I think we should just start calling you FEMA Camp John from now on.

    If you were doing your job, John, you wouldn’t post until somebody had explained how the bill super-double-secretly does the right thing and is perfectly necessary.

  28. 28
    MikeJ says:

    @MattR: Agreed. I’d say as long as the notarization was made in good faith, it should probably be accepted. If you have evidence of a notary in Deleware putting his seal on anything for a price, that would be a problem. But that would be a problem even if the notary were in state.

  29. 29
    SiubhanDuinne says:

    @Rudy: Link to Brunner letter plz?

  30. 30
    Rudy says:

    Maybe I can get a link on here? Doh!

    http://www.progressohio.org/bl.....ation.html

  31. 31
    Glenndacious Greenwaldian (formerly tim) says:

    I’m sure President Obama knew nothing about this bill or this issue, in any way, shape, or form before it appeared on his desk. I am also certain that he is shocked, shocked I tell you, to read what it contains.

    My god, these legislators are abominable pigs. But sure, ya know, vote Dem this november. They’re looking out for us.

  32. 32
    That's Master of Accountancy to You, Pal (JMN) says:

    This is actually a real problem. Dealing with out of state notarizations can be a pain. Often, it’s not clear whether a court should accept it or not. Further, imagine what sort of situation you’d be in if you, in good faith, got a document notarized and then found yourself in an out-of-state court, where they won’t accept it.

    On its face, I don’t have a problem with this bill. The timing is sure as hell suspicious, but it doesn’t surprise me that it got fast tracked through Congress, but it is a reasonable solution to a real problem.

    What’s not reasonable are the particular circumstances we find ourselves in. I would not have a problem with Obama vetoing it, along with specific instructions as to how to fix it with regards to the foreclosure problem to get him to sign it. Hell, I might not have a problem with him signing it as is, depending upon how it might be applied.

  33. 33
    BGinCHI says:

    If we had Sharia law none of this would be happening.

    Plus, our soups would be halalicious.

  34. 34
    John Bird says:

    One day, a Democratic Congressman is just going to come to y’all’s houses and take a gigantic shit on your windshields, each and every one of you, and then it’s going to be an all-out blogfest as you each try to out-intellectualize each other on why it was a good thing. Natural fertilizer! A recognition of sexual fetish lifestyles! Anyway, SIXTY VOTES.

    At what point are you going to join the rest of the world in NOT trusting politicians?

  35. 35
    Redshift says:

    @Rudy: I was kind of put off by the fact that the document cited in Brunner’s email was put out by the notaries’ professional association, who have a obvious interest in the matter. I do as well; I work on software and services that can be used for electronic notarization, or as a component of it, depending on how it’s defined. (The company I work for actually owns the domain ‘notary.com’.)

  36. 36
    MikeJ says:

    @John Bird: Do you think that if you sue somebody in a different state that the court should refuse any documents you present because they were notarized in your home state?

  37. 37
    Steve says:

    @MikeJ: What state has a rule like that?

  38. 38
    Glenndacious Greenwaldian (formerly tim) says:

    @John Bird:

    Bingo and ditto.

  39. 39
    Mnemosyne says:

    @Steve:

    Under any set of rules, if the statements in the affidavit are false, it’s the corporate officer who signed them that bears responsibility for the perjury. It’s not like the notary goes through the affidavit and fact-checks it.

    If it’s not witnessed by a real, live notary, how much leeway would that officer have to claim that the signature is not his/hers and therefore s/he can’t be held responsible for any false statements?

  40. 40
    John Cole says:

    @John Bird: Who the fuck is trusting them? The moment I read about this I posted on it. I asked what people knew and if the reporting was accurate. What exactly do you want me to fucking do?

  41. 41
    SiubhanDuinne says:

    @Rudy: Thanks for the Brunner link. Very interesting.

    Isn’t this something that Elizabeth Warren should be (and presumably *is*) looking at with a gimlet eye?

    And I’m probably venturing into the Land of Unintended Consequences here, but I really don’t trust unanimous consent, voice vote passages on much of anything more substantive than naming a bridge or wishing a scout troop happy anniversary. I’d like to be able to find out exactly how every Representative and Senator votes on every piece of legislation that comes before them. Just push the damn buttons and record who voted aye or no. It’s not like the technology is too obscure or anything.

  42. 42
    MikeJ says:

    @Steve: I’m just reading the bill. The only thing that seems the least bit novel is accepting electronic notarization.

    What do you think the bill means?

  43. 43
    General Stuck says:

    Might make it some more difficult to follow up on fraudulent notarizations. But doesn’t seem like that big a deal to me. Notary’s just deal with the person signing something actually being that person, right?

  44. 44
    That's Master of Accountancy to You, Pal (JMN) says:

    @SiubhanDuinne:

    Isn’t this something that Elizabeth Warren should be (and presumably is) looking at with a gimlet eye?

    Mmmmmm. Gimlets. Bombay Sapphire in mine, please.

  45. 45
    Rudy says:

    @Redshift: I can’t say that I’m knowledgeable on the topic, but the hairs on the back of my neck stand up when I hear things are ‘rushed through’ pretty much any part of the government (well, except the post office, then I just laugh). I do find the timing interesting though. It’s been proposed in the last three sessions, which in conspiracy land puts you back to when the mortgage foreclosure process was really ramping up. I can’t speak as to if its shady or not, and several peeps above seem fine with it. I just found that and thought it added a little more info to the topic. :)

  46. 46
    That's Master of Accountancy to You, Pal (JMN) says:

    @General Stuck: Yeah. Overall, I think this is overblown. I’d need to find out a bit more about electronic notarizations to be sure. Hell, notaries are the bargain basement of signer identification. If you want to move stock around, you need a medallion.

  47. 47
    Steve says:

    @MikeJ: I discussed it above. I’m just saying, don’t glibly accept that the bill solves a problem without knowing whether the problem exists.

    @Mnemosyne: I don’t know what safeguards go along with electronic notarization, but it’s pretty tough for a party to a lawsuit to deny that they signed the papers they submitted in court. I feel like I have to know more about whether the system is actually abused in practice.

  48. 48
    SiubhanDuinne says:

    @That’s Master of Accountancy etc. etc. : Bombay Sapphire. You have fine taste, sir.

  49. 49
    Mogden says:

    Attention loyal progressives! Your ever-nurturing government has screwed the citizenry again, for approximately the 99th time out of 100. But I’m sure the politicians will get it right next time, despite the curious fact that they have every incentive not to. By all means, carry on with your program to give the government ever more power and money.

  50. 50
    KG says:

    @Rudy: real estate and civil procedure law tends to move quickly in short bursts and then not move very much for long periods of time.

    When a certain type of litigation comes up a lot, it becomes easier to notice issues that need to be addressed. My guess is that is what happened here. No one really gave much thought to evidentiary rules regarding out of state notarized documents, then suddenly they were an issue in a lot of litigation, and to avoid inconsistent decisions and a bunch of appeals (and litigation dragging on for decades), a law is passed to deal with the issue.

  51. 51
    Suck It Up! says:

    @Glenndacious Greenwaldian (formerly tim):

    I bet you tend to hold a lot of grudges.

  52. 52
    El Cid says:

    Newt Gingrich, keepin’ classy.

    Former House Speaker Newt Gingrich is advising Republican candidates on November’s ballots to frame the choice for voters between Democrats as “the party of food stamps” while selling the GOP as “the party of paychecks.”

    Ha ha ha! Starve you jobless freaks! Ha ha ha!

    [Shorter Newt Gingrich: “N******!!!!!”

  53. 53
    MikeJ says:

    @SiubhanDuinne:

    Bombay Sapphire. You have fine taste, sir.

    If you like drinking flowers. I like gin. Beefeater, please.

  54. 54
    KG says:

    @El Cid: the party of paychecks? So, that means they are going to hire more government employees?

  55. 55
    slag says:

    @KG and @Steve: OK, lawyerly types. So far your arguments seem the most compelling. My question is about this statement from the Reuters report:

    The legislation could protect bank and mortgage processors from liability for false or improperly prepared documents.

    Seems a bit broad, no? How true might it be?

  56. 56
    Zuzu's Petals says:

    Looks innocuous to me, and likely addresses real-life problems. And whoever asked if Section 3 was constitutional – sure, because the notarization has to occur in or affect interstate commerce.

    As to the electronic record thing, nothing novel about that. The ten-year-old ESIGN Act already requires that certain electronic documents and signatures that meet the standards of the act be recognized as legal and valid. As far as I can see, this just extends it to recognition of electronic notarization across state lines.

  57. 57
    Suck It Up! says:

    I am constantly amazed by how much people think they know. People, wait until the bill is explained in “english”. These preemptive shits in your pants is silly.

    (not referring to you John)

    by the way, I think several readers are waiting for the day that you completely disown Obama. That’s why you get comments like that. They are waiting to welcome you and other readers into their coven. Waiting for you to see the light or some such shit.

  58. 58
    eemom says:

    The last big “timing” scandal of the week kind of fizzled out after it was revealed that Alabama USA Canary and all but two of her staff were removed recused from the “bingo” prosecution.

    Jussayinzall.

  59. 59
    That's Master of Accountancy to You, Pal (JMN) says:

    @MikeJ: It’s gin. It’s vodka soaked in pine flowers. That’s the way it’s supposed to taste. Vodka, flowers and lime. What more could you want?

  60. 60
    General Stuck says:

    @eemom:

    Looks like Holder kept the Canary in her cage. /rimshot

  61. 61
    wilfred says:

    For me, it is a simple matter. Should the President sign it, I will know it was, and is, a good thing that the people may rejoice in.

    If he doth not, then it shan’t be thusly.

  62. 62
    Zuzu's Petals says:

    Sorry, here’s the link to the Wiki article for ESIGN.

  63. 63
    Carl Nyberg says:

    Rep. Aaron Schock (R-IL18) was a notary who backdated documents he notarized for his family to give them financial advantage. Schock was not prosecuted when the fraud was detected.

    So, it seems reasonable that if the federal government is going to tinker with the recognition of notaries from state to state that part of the process should be improving the quality of notaries and maybe ensuring that notary fraud gets prosecuted.

    A state’s notaries shouldn’t be required to be recognized if the state fails to prosecute notaries who commit fraud.

    Put pressure on states to prosecute notary fraud and I suspect the number of foreclosures based on notary fraud (or mistakes) goes down.

  64. 64
    Steve says:

    @slag: Hard for me to see how this would protect anyone from liability for submitting a false affidavit.

    One of the virtues of the committee process in Congress is that we don’t have to guess, because if a bill is bad juju, typically some consumer group will sound the alarm. I think this bill went through committee in the House but not in the Senate, so I’m not really sure what to think of it.

  65. 65
    MikeJ says:

    @Steve: What does notarization have to do with the truth or falsity of a affidavit? A notary checks your ID, and swears upon her seal that your id matches who you said you were. She doesn’t make any claim as to the truth or falsity of your statements.

  66. 66
    KG says:

    @slag: based on the language of the statute, I’d say no, it doesn’t provide protection suggested by the article. Truth is, if you’re challenging whether a document was properly notarized… if that’s all you have… you’re screwed.

    And honestly, this isn’t even what the GMAC and JPMorganChase got in trouble over. That was about the information in the documents were properly verified, not that the documents weren’t properly notarized.

  67. 67
    Redshift says:

    @Mnemosyne: The term for that is “non-repudiation.” To develop a method of electronic verification that anyone will use, it’s an issue you have to deal with. While it sounds easy to legislate this so as to screw over the little guy, the major market for this stuff is between businesses, so no one is going to accept a technology that allows your partner in the contract to easily weasel out of it (and conversely, if it’s that weak, it’s weak enough for someone to actually fraudulently impersonate the legitimate user.)

    None of these are comments on the legislation, of course. I haven’t heard anything about it at work, but I don’t pay a lot of attention to the non-techie side of things.

  68. 68
    That's Master of Accountancy to You, Pal (JMN) says:

    @Carl Nyberg: It isn’t that hard to become a notary anywhere. There are a number of ways in which the legal system is designed on the premise that people are honest when submitting documents. What I’ve been told by people who are attorneys is that, even without notarizations, documents are presumed to be honestly dated, and evidence needs to be shown otherwise.

  69. 69
    wilfred says:

    @Suck It Up!:

    An interesting point: Can a person be born again, again?

    Some of us witnessed Cole seeing the light and abandoning the Republicans. Can you see the light more than once?

    Are there more lights out there? Can political consciousness be like so many reincarnations?

    Or is it just binary partisanship all the way down?

  70. 70
    Martin says:

    I think this is pure damage control. The foreclosure fraud problem is simply exploding out of control. State AGs are getting involved, title insurers are refusing to insure depending on who the previous lender was, the courts could potentially come quite literally to a grinding halt as consumers exercise their rights here.

    If the lenders and title companies have fucked this up as badly as it seems, what’s the possible outcome here? Are we talking about bankrupting the title insurers? The title companies? The lenders?

    Presumably if these cases are resolved in favor of the homeowners they now own their homes outright, and the rest of the chain can work out who’s going to eat that cost. What kind of economic damage are we looking at here?

    I’m all in favor of consumer rights, but I wonder what’s the realistic economic consequence here, and what the tolerance of the administration and congress is to see that consequence play out.

  71. 71
    slag says:

    @KG: @Steve: Thanks! Lawyerly types rock!

  72. 72
    Steve says:

    @MikeJ: Please show me where I said a notary has anything to do with the truth or falsity of an affidavit. I’m pretty sure I know what a notary does.

  73. 73
    Zuzu's Petals says:

    @Steve:

    Well, almost all states have adopted the Uniform Electronic Transaction Act, which allows for recognition of electronically notarized documents. Don’t know the extent to which UETA lays out specific standards to be applied, but I think it’s safe to assume that a court accepting an electronically notarized document from a UETA state wouldn’t really be settling for a lower standard.

  74. 74
    Jim, Foolish Literalist says:

    @KG:

    So, that means they are going to hire more government employees?

    Private contractors. The government mules of the 21st century.

  75. 75
    KG says:

    @Martin: I’ve spent the last three years or so litigating mortgage fraud cases. Honestly, I have no idea how this turns out. I can tell you that Quiet Title and rescission under TILA are pretty much non-starters with the Courts.

    The liability in most of these cases really falls on the mortgage brokers. The problem is most of them have gone out of business, gone bankrupt, or didn’t have insurance (or worse, their insurance has gone out of business). Showing that the mortgage brokers were agents of the lenders has been pretty much impossible, and that’s the only real chance a borrower has to get quiet title in most of these cases.

  76. 76
    slag says:

    @El Cid: I get so confused when they say stuff like that because all this time I’m thinking we’re supposed to be the Party of Elitists.

    Although to be fair, liberals make similar categorical errors when we sometimes accuse the GOP of being the Party of Evil and at other times accuse the GOP of being the Party of Stupid. Personally, I’m a moderate on this issue and happily resign myself to thinking of the GOP as the Party of Stupid Evil.

    I wonder how the moderate GOPers resolve their dissonance on the Elitist/Foodstamp question. Can foodstamps be elitist?

  77. 77
    eemom says:

    The text says “recognize any notarization.” “Recognize” is not defined, although other terms in the bill are. “Recognize” can mean a lot of things. There is certainly no standard meaning of “recognize” that equates to “accept as valid no matter what.”

    The text provides for such recognition “in the case of an electronic record,” if “the seal information is securely attached to, or logically associated with, the electronic record so as to render the record tamper-resistant.” This suggests to me that the whole purpose of the thing is to prevent fraudulent electronic notarizations.

    Also, fwiw, in my experience in standard commercial litigation, out of state notarizations are routinely “recognized” in any court. If, as the reporting and legislation suggest, there has been some epidemic of fraudulent electronic notarizations in connection with foreclosure proceedings, that would explain the raison d’etre of this bill.

    As for whether it “will make it more difficult to challenge improper foreclosure attempts,” I’m not sure what they mean, unless they are suggesting that this provides some sort of presumption of validity that plaintiffs would have to overcome. But the word “presumption,” which is an evidentiary term of art, is not used; and neither is the word “valid,” so I’m not sure what that’s about.

    As for “passed without public debate” suggesting some kind of sneaky cloak and dagger shit — PLEASE. “Public debate” on a statute about the recognition of out of state notarizations? Are you fucking kidding me?

  78. 78
    Little Boots says:

    every so often, you think the word “banksters” is a bit unfair. then you realize, no, not possible.

  79. 79
    Little Boots says:

    and incidentally, peak wingnut’s actually kinda funny. so there.

  80. 80
    Steve says:

    @Zuzu’s Petals: That’s interesting. I have a case right now involving a judgment that I’m trying to get recorded in the state next door. 48 states have signed onto the uniform law that allows automatic recognition of sister-state judgments, but guess what, the state I’m dealing with is not one of them.

    Every state is obligated to recognize out-of-state judgments under full faith and credit, of course, but nothing says they have to provide an expedited procedure. So I have to go through a mildly painful process and wait a couple months to get it all taken care of.

    Having said that, I don’t see Congress rushing to jam a federal standard down the throats of those two holdout states. If they want to follow a different procedure, everyone seems to agree it’s their right as a sovereign state. So I’m a little puzzled at why this bill had to be an urgent national priority.

    I’m not going to get up on a high horse over states’ rights but I’m not sure that even rules of state procedure need to be federalized.

  81. 81
    That's Master of Accountancy to You, Pal (JMN) says:

    Too many threads. I’m not sure which one is live.

    Am I the only one wondering if asiangrrlMN is too blotto to comment?

  82. 82
    Little Boots says:

    well this thread is sorta quivering.

  83. 83
    Mnemosyne says:

    So I guess this is the question in my mind:

    The problem right now seems to be that foreclosures are being sped through the courts with only a cursory examination, which is why so many states have shut down foreclosure procedures pending investigation. Is there anything about this legislation that would allow judges to move cases through even faster and with less oversight than they already are? That would seem to be the potentially worrisome point.

  84. 84
    slag says:

    I’m finally catching up on my TDS and found the NY Mag fluff piece on Jon Stewart. All I can say is, thank FSM for that man!:

    “Here’s something you always like to see,” Stewart says, scanning the front page of the Washington Post. “ ‘U.S. Trade Deficit Startles Markets.’ Now, we’ve understood the U.S. trade deficit for a while. Are the markets small children that are easily startled? The next day, they’ll get an unemployment number and go, ‘Oh, I don’t know why we were startled and lost 200 points yesterday; today, we realized the shirt on the chair wasn’t a monster, so we’re going to put 300 points back on the Dow because we’re fucking 5 years old.’ ”

    So. Damn. True. How the hell are we a superpower?

  85. 85
    Little Boots says:

    tariffs, and gold. Glenn Beck loves gold. gold and tariffs have always gone together. why won’t Glenn Beck support tariffs? is it that damned Woodrow Wilson again?

  86. 86
    Fwiffo says:

    Seriously? The Senate’s so bottled up you can’t pass gas, let alone a bill. Yet this just sails through with nobody hearing about it?

  87. 87
    Zuzu's Petals says:

    @Steve:

    Well don’t forget that this bill requires the federal threshold to be crossed: the notarization must “occur in or affect” interstate commerce. A pretty easy standard to meet, IMO.

  88. 88
    Little Boots says:

    time to kill the filibuster. it’s not like it’s sacred. it was this weird thing we just sorta started doing in this country. let it die.

  89. 89
    dday says:

    I’d rather talk to a lawyer involved in these cases than make a snap judgment, but I cannot see anything here that would make it more difficult to pursue foreclosure fraud cases, and the only people asserting that it would are doing just that, asserting.

  90. 90
    eemom says:

    @Steve:

    I’m not going to get up on a high horse over states’ rights but I’m not sure that even rules of state procedure need to be federalized.

    I wouldn’t go so far as to say this bill does that, but it does prescribe state court procedure on this particular point in a way that struck me as unusual for a federal statute. But I am not an expert on these issues.

  91. 91
  92. 92
    Little Boots says:

    how about a foreclosure holiday. we’ve done bank holidays, before. is it impossible to do something that actually benefits most Americans?

  93. 93
    Zuzu's Petals says:

    @eemom:

    The text says “recognize any notarization.” “Recognize” is not defined, although other terms in the bill are. “Recognize” can mean a lot of things. There is certainly no standard meaning of “recognize” that equates to “accept as valid no matter what.”

    Actually the text says “recognize any lawful notarization.” So that would seem to address the “accepting as valid no matter what” problem.

  94. 94
    Odie Hugh Manatee says:

     

    Glenn Beck loves gold. gold and tariffs have always gone together.

    As much as we rip on Beck for his attachment to shilling for gold sellers, I think Ed Schultz deserves a hit for the very same thing on his radio show. When I first heard that I had to laugh at Ed later ripping on Beck about his shilling for gold sales.

    Maybe he doesn’t like the competition in the gold sales biz? ;)

  95. 95
    slag says:

    @The Raven: You mean that one: @dday?

  96. 96
    eemom says:

    @Little Boots:

    You have no idea how awesome it would be if a statute regulating the interstate recognition of notarizations turned out to be the Hill On Which The Filibuster Died.

    That alone would be worth the price of law school admission and 23 dreary years of practice.

  97. 97
    Little Boots says:

    @Odie Hugh Manatee:

    You do have a point. those gold ads are ubiquitous.

  98. 98
    Little Boots says:

    @eemom:

    Democrats keep clinging to it, but they never actually use it. It’s time has passed.

  99. 99
    General Stuck says:

    Well, this is all very interesting and am sure it will work itself out for the survival of the human race, but I am going to bed and dream of sugar plum fairies. What’s an Obot to do in this big cruel conspiracy called life in Amerika?

  100. 100
    Little Boots says:

    @General Stuck:

    pray.

  101. 101
    Mark S. says:

    Here’s something I don’t understand:

    The byzantine mortgage securitization process that helped inflate the housing bubble allowed home loans to change hands so many times before they were eventually pooled and sold to investors that it is now extremely difficult to track exactly which lenders have claims to a home.

    Who is receiving the mortgage payments? Isn’t that the person who usually has the claim to the house? Or is that not what these mortgage backed securities consisted of?

  102. 102
    Bob Loblaw says:

    You guys worry too much. Believe me, nobody in Congress knows what this bill does either. You’d be better off asking their staffers (or the particular lobbyists who wrote the thing).

    Statutory changes get passed all the time before recesses. That’s why they have unanimous consent rules in the first place.

  103. 103
    Zuzu's Petals says:

    @The Raven:

    With respect to Jennifer Brunner’s piece in DKos, it seems she objects to the bill’s requirement that certain electronic notarizations be recornized. She evidently believes that electronic notarizations are not as reliable as those in which the signer is required to appear before the notary.

    However, all 47 UETA states already require that electronic notarizations of specified transactions be recognized. So how is it substantively different to require that courts in one state recognize the lawful electronic notarizations of another state? Assuming that the standards are comparable.

  104. 104
    That's Master of Accountancy to You, Pal (JMN) says:

    @Mark S.:

    Who is receiving the mortgage payments? Isn’t that the person who usually has the claim to the house?

    No. You send the mortgage payment to the servicer, who sends it on to whoever collects the funds for distribution to the various people who actual hold the mortgage, who all own the house in relative proportion to which they hold the loan, assuming you can figure out what percentage that is.

  105. 105
    That's Master of Accountancy to You, Pal (JMN) says:

    @The Raven:

    Yves Smith:

    I think that what this demonstrates is that Yves Smith doesn’t know that much about legal procedures. She has elements of core competency, though she has yet to acknowledge the ways that she’s flip-flopped on some of her positions (such as putting derivatives trading on exchanges) as she has assumed the mantle of the Financial Blogger Most Determined to Represent the People.

    I’ve lost a lot of confidence in her over the last year.

  106. 106
    Mnemosyne says:

    For anyone who hasn’t heard it, the episode of This American Life called “The Giant Pool of Money” probably has the clearest and most understandable explanation of what happened in the mortgage market and how it all fell apart.

  107. 107
    eemom says:

    @Mark S.:

    The problem is that the administration of the mortgage, including the receipt of payments, is routinely delegated to a “servicer” who has no legal interest in the mortgage transaction.

    The legal interest in the mortgage itself (i.e., the rights of the mortgagee) is combined with a whole bunch of similar interests in other mortgages and sold as a security.

    The servicer has all the papers relating to the origination and servicing of the loan but no involvement in the securitization process, so it’s not surprising that it has no idea who the hell actually “owns” the mortgage rights.

    To wade through the securitization process for any particular loan to figure out who, at the end of the day, ended up “owning” those rights has gotta be a hellish nightmare of tedious, expensive document review.

  108. 108
    patrick II says:

    From “mersinc.org”

    “Process Loans not Paperwork”
    “MERS is an innovative process that simplifies the way mortgage ownership and servicing rights are originated, sold and tracked. Created by the real estate finance industry, MERS eliminates the need to prepare and record assignments when trading residential and commercial mortgage loans.”

    MERS is an electronic database that allows transfers of mortgages by simple electronic transaction. The ease of transfer and the fungiblity of the money represented by the electronic version of the stored mortgages had no small part in the recent banking financial crisis. The MERS transfers do not always fulfill the legal requirements of the state law and have sometimes been successfully challenged in bankruptcy proceedings because there was technically never a legal transfer of ownership (say from the local bank to FANNIE, or another larger bank accumulating mortgages and selling derivatives.)
    Since there has been nothing written about this bill, I don’t know if this is the problem they are trying to solve, but it might have something to do with it.

  109. 109
    Zuzu's Petals says:

    @slag:

    What’s so funny about that quote is that Stewart’s brother is CEO of the NY Stock Exchange.

  110. 110
    Mnemosyne says:

    @Mark S.:

    Here’s something scary: it’s fairly common for banks to foreclose on mortgages that they can’t prove they own. There have been a couple of cases (can’t find them right now) where it turned out that the foreclosing bank had actually sold the mortgage to someone else and forgotten.

  111. 111
    kay says:

    @Zuzu’s Petals:

    However, all 47 UETA states already require that electronic notarizations of specified transactions be recognized. So how is it substantively different to require that courts in one state recognize the lawful electronic notarizations of another state? Assuming that the standards are comparable.

    Because Ohio lawyers are regularly sanctioned for improperly notarizing a document. We had a six month suspension from practice here a couple of years ago, on just that issue.

    I assume the mortgage companies will find the state with the least oversight of notaries, and have all the signatures notarized in that state.

    It doesn’t go to the validity of the document, it goes to the validity of the signature, so I agree with you there. Still, it takes one more regulatory and accountability tool away from states. States can sanction the notary.

    Presumably, they could have gotten around this anyway. They’d simply use an out of state notary on every document filed in a particular state: a Florida notary would attest to every signature filed in Ohio, for example.

    State law and regulatory practice can be a shield for people in that state. It’s a way in. There’s the conservative argument, that state law protects states from federal (government) oversight. There’s a flip side, though. A liberal argument, and that’s what Brunner is relying on here. State law can protect state residents from out of state or national business interests. The race to the bottom fear. That’s my approach, actually. Her interest is in the power to sanction Ohio notaries, I suspect, because she’s charged with oversight of who is a notary in Ohio, and she’s already indicated her intention to go after Ohio notaries who improperly notarized mortgage documents. It’s not a big stick, but it’s what she’s got.

    I’d prefer Obama didn’t sign this law. This never ends well, for individuals versus large national entities. It’s always presented as “efficiency” and “no big deal” and it seems to me it always ends with cutting off one more way to contest an action or hold some individual accountable, for consumers. I’m just a little wary.

  112. 112
    John S. says:

    What a thread.

    Nobody really knows what the bill means or will do exactly, but that doesn’t stop the usual wailing of, “Obama is worse than Bush, he sold us out!” It’s pretty sad how these things shake out these days. I just hope most of you have nothing to do with law enforcement given the tenuous grasp of facts and evidence before assigning guilt.

    Just to be clear (for the Firebagger morons), I’m not defending Obama or the Democrats. But I don’t know what this is really all about, and neither do any of you. I’ll save my powder for when more facts come in as to what this is all about, TYVM.

  113. 113

    Back in the mid 90’s, D.C. allowed domestic partnerships, which could be created by grabbing your honey filling out a form and taking it and some money to a notary public.* (Congress quickly stomped all over it of course.)

    The few privileges it conveyed only applied in D.C. but under this bill, wouldn’t other states have had to recognize the arrangement?

  114. 114
    John S. says:

    @Kay:

    Thank you for your level-headed assessment. I just saw it come up after i had posted. I’m glad some folks around here still know how to use reason.

    Thank you.

  115. 115
    Steve says:

    @kay: I don’t see this as similar to the “race to the bottom” in insurance, credit card regulation, etc. The mortgage companies may be looking to save time, but they’re not actually trying to circumvent the notary requirement.

    The purpose of a notary is to ensure that the person who signed the “Affidavit of John Smith” is actually John Smith. Mortgage companies aren’t trying to have someone other than John Smith sign his affidavit, and doing so would be fraud regardless of how lax the notary requirements are.

    I’m not saying there is no danger here, but I don’t foresee that 20 years from now all documents will be notarized in Kentucky, the way all credit cards companies are headquartered in South Dakota.

    @kommrade reproductive vigor: The only thing they have to recognize is that it’s a properly notarized document. They don’t have to recognize the validity of the underlying act, unless full faith and credit would require it anyway.

  116. 116
    jinxtigr says:

    Does resolving notarization issues across state lines require a lot of effort, communication, and time? Like, if this bill wasn’t happening, and tons of mortgage stuff flooded the court system, all of which had really complicated notary issues that the borrowers knew was the most effective way to stall foreclosure, would the court system basically freeze up? Is this starting to happen?

    In Mnemosyne’s link there’s a judge that’s been kicking lenders out of court for not being able to prove they own loans. Would this still be happening but more efficiently if notarizations were presumed OK and just the underlying issues were in question? Is challenging the notarization a normal tactic now?

    Seems like there’s two sides- one, a lot of people got houses they shouldn’t, and two, a lot of lenders played so fast and loose with the paperwork that they in turn shouldn’t have a right to foreclose.

    I’m not sure being improperly notarized is really a fundamental problem with the paperwork- seems like it is a potential bottleneck in a situation where the REAL problems are elsewhere.

  117. 117
    Onkel Bob says:

    An interview with Ohio Secretary of State on this issue on PRI’s Marketplace: Faulty Foreclosure Paperwork

  118. 118
    The Pale Scot says:

    late to the party as usual

    This is a huge problem that the banksters are trying to paper over.

    Ya’ll need to be reading Big Picture and Naked Capitalism.

    the short story:

    the mortgages were turned into securities with an intent to assign document thru “Real Estate Mortgage Investment Conduits” these are entities designed to own mortgages and also avoid corporate taxes, the REMICs are managed by ‘trusts’ that also have tax advantages.

    In 100s of thousands of cases, the REMICs never actually paid for the paperwork to be processed and actual ownership of the note to be transfered. they saved billions by not doing this.

    Now the situation is that the note is actually still in the files of mortgage lenders that went bankrupt, and are the property of the bankruptcy court, they’re not going anywhere, but the trusts are still foreclosing and selling properties they don’t have titles to.

    Property titles are the bedrock of our economy, either this is admitted, with a big drop in foreclosed house values, because title insurers will not touch it,except for the bank’s own title co. which will sign off but not actually cover you, or it’s covered up, which means nothing anyone owns is safe. It will be like England right after the Dark Ages, with church lawyers producing documents that show that your grandpappy actually willed his property to the church.

    some quick reads to explain
    http://www.ritholtz.com/blog/2.....of-horror/
    http://www.ritholtz.com/blog/2.....blic-good/
    http://www.ritholtz.com/blog/2.....al-crisis/
    http://www.ritholtz.com/blog/2.....paperwork/
    http://www.ritholtz.com/blog/2.....ure-train/

    Wells Fargo:
    http://www.nakedcapitalism.com.....uyers.html

    “Now this little problem can be solved by title insurance, right? Well, guess what, some title insurers have exited the business, some others are starting to write policies with meaningful exceptions when they can’t go to the courthouse and find a clear chain of title. Oh, and Wells is trying to steer you towards their title insurer. What do you think the odds are that their title insurance policy doesn’t have exceptions?”

    M. Cole, you’d be doing your readers a service by watching this.

  119. 119
    kay says:

    @Steve:

    The purpose of a notary is to ensure that the person who signed the “Affidavit of John Smith” is actually John Smith. Mortgage companies aren’t trying to have someone other than John Smith sign his affidavit, and doing so would be fraud regardless of how lax the notary requirements are.

    Brunner has two arguments. She thinks an in-person notarization is more reliable, and she wants to retain the power she has over Ohio notaries (this isn’t explicit, but she asserts she has authority over notaries, and she does).

    I’m not commenting on any larger issue.

    I’m simply saying that this might make it more difficult for her to sanction notaries.

    As I said, it’s not a huge stick, but it’s one of her tools. She doesn’t want to lose it.

  120. 120
    les says:

    This looks to me like another case of the feds stepping in because some states have an overdeveloped case of homerism. By having arcane rules about out of state notarizations, or requiring everything done in their state to have in state notarization, they can (i) fuck with outsiders and (ii) generate more business instate, when it’s easier/cheaper to buy local help than deal with stupid rules. I’ve been doing real estate type stuff in the midwest for many years, and this shit hardly ever comes up because most states already use this rule–if the notarization was proper where it was done, it’s recognized. Note that this practice, apparently like the new Fed law, doesn’t give you any presumption that the notarization was in fact proper, and it doesn’t say anything about the accuracy, validity, etc. of the underlying document. It just cuts out procedural/parochial bullshit.

    The foreclosure problem has little to do with notaries, it has to do with the asshole whose signature was notarized not having read–or, apparently, in some cases not even having possessed–the documents he/she claims authorize the foreclosure. As noted above, in the go-go securitization process, actual ownership of specific mortgages was not a big concern. So now nobody really knows who the owner is of shitloads of mortgages, or who has the right to foreclose.

  121. 121
    Jose Padilla says:

    “I’d rather talk to a lawyer involved in these cases than make a snap judgment, but I cannot see anything here that would make it more difficult to pursue foreclosure fraud cases, and the only people asserting that it would are doing just that, asserting.”

    This is what will happen. A bank tries to foreclose on your house that it doesn’t own the mortgage on. A bank employee gives an affidavit in support of a summary judgment saying the bank does own it. What are your causes of action? Fraud and conversion, both intentional torts. A deposition is taken of the person who signed the affidavit. He says he didn’t sign it. Who signed it? Nobody knows, maybe a machine. Who notarized it? A machine. One big screw-up, but you can’t prove intent, so you lose. You’re out ten grand in attorneys fees but at least you still have your house.

  122. 122
    Binzinerator says:

    @The Pale Scot: Holy shit. Sounds like they’ve made a dog’s lunch of the whole underpinnings of property ownership.

    From American Banker, via the third of the links you provided:

    it has become impossible to establish when a mortgage was sold, and to whom, so the servicers are trying to recreate the paperwork, right down to the stamps that financial companies use to verify when a note has changed hands.

    It sounds like in the greedy rush to the securitization of mortgages, they bypassed the system for tracking who owns what, and now they’re just making shit up to make it look like a legal chain of ownership.

    This is third-world shit writ large.

    But I’m not sure how that bill John posted about fits in with that. Would it somehow make it easier to do this sort of backfilling? How?

    I’m way over my head here, but the foreclosures sure looks like systemic and organized fraud to me.

  123. 123
    Steve says:

    @Jose Padilla: That’s absurd. A bank employee admits that the bank submitted a fraudulent affidavit in a court action, and you think you have no recourse? That’s crazy. You would have that bank dead to rights, and you would also be entitled to reopen and overturn the judgment of foreclosure.

  124. 124
    Binzinerator says:

    @les:

    So now nobody really knows who the owner is of shitloads of mortgages, or who has the right to foreclose.

    Jesus Christ.

    @Jose Padilla:

    A bank tries to foreclose on your house that it doesn’t own the mortgage on. A bank employee gives an affidavit in support of a summary judgment saying the bank does own it. What are your causes of action? Fraud and conversion, both intentional torts. A deposition is taken of the person who signed the affidavit. He says he didn’t sign it. Who signed it? Nobody knows, maybe a machine. Who notarized it? A machine. One big screw-up, but you can’t prove intent, so you lose. You’re out ten grand in attorneys fees but at least you still have your house.

    Jesus Fucking Christ.

    So you still have your house. Does that mean you now have full ownership of it? If not the borrower, then who? And if you now own the house, doesn’t the bank, which thought (or likely, knew it didn’t) it owned now has to take that as a loss?

    How many such losses before we hear cries for another bank bailout?

    And how many mortgages is ‘shitloads’?

    This is not looking good.

  125. 125
    Ryan says:

    H.R. 3808: Interstate Recognition of Notarizations Act of 2009

    Apr 27, 2010: This bill passed in the House of Representatives by voice vote. A record of each representative’s position was not kept.
    Sep 27, 2010: This bill passed in the Senate by Unanimous Consent. A record of each senator’s position was not kept.

  126. 126
    scav says:

    Somehow, the sudden attack of bipartisanship in the middle of the night with no votes recorded in both instances suggests, well, something big? Just maybe? Ears will perk up. This at least has MERS, other big financial players, multiple states (and AGs) and has happened recently (via Bloomberg)

  127. 127
    Glenndacious Greenwaldian (formerly tim) says:

    @Suck It Up!:

    I bet you tend to hold a lot of grudges

    Seriously, could you elaborate on your meaning in making this statement? Perhaps you can help me with some self-awareness.

  128. 128
    Uncle Clarence Thomas says:

    I don’t understand why anyone thinks President Obama would sign any bill which is less than historic.

  129. 129
    Zuzu's Petals says:

    @kay:

    You’ve raised some very good points in this and your prior response to me. However ..

    I don’t see how this weakens any existing authority Brunner has to discipline Ohio notaries. After all, Ohio’s UETA law already requires that electronic notarizations of applicable records be accepted.

    The new law would require Ohio courts to recognize lawful notarizations, including electronic notarizations, from other states. Would Brunner have oversight of these notarizations in any case? And if another state has lower standards, why does she not object to the recognition of regular notarizations as well?

  130. 130
    Zuzu's Petals says:

    @les:

    Yes, federal law – ESIGN – already requires acceptance of certain electronic documents and recognition of electronic signatures when they are in or affect interstate commerce. The UETA law, adopted by 47 states, requires that electronic notarizations (notarization of electronic signatures) be accepted within the state (see, for instance, Ohio).

    It seems to me this bill brings federal provisions into conformity with state UETA provisions, with regard to electronic notarizations. I’m not saying it doesn’t raise some of the questions discussed here, just observing what I think is its substantive effect.

  131. 131
    Zuzu's Petals says:

    @Zuzu’s Petals:

    Wow, I just discovered something.

    The federal ESIGN law already requires the acceptance of electronic notarizations on applicable records in or affecting interstate commerce. See 15 USC Sec. 7001 (g) . This tells you how long it’s been since I’ve looked at it.

    So what is the reason for enacting this new law? Possibly because ESIGN doesn’t cover court procedures? Or it doesn’t cover every type of document? Anyone more familiar with its provisions?

    At any rate, doesn’t this sort of undercut Brunner’s argument?

  132. 132
    Allan says:

    Tapper’s reporting that Obama will pocket-veto the legislation.

  133. 133
    Steve says:

    @Zuzu’s Petals: 15 USC § 7003(b)(1) says: “The provisions of 15 USC § 7001 shall not apply to court orders or notices, or official court documents (including briefs, pleadings, and other writings) required to be executed in connection with court proceedings.”

  134. 134
  135. 135
    The Raven says:

    @Zuzu’s Petals: race to the bottom. All it takes is one state to adopt lax electronic signature standards, and all the foreclosure mills will move there, and everyone will have to honor their bad epaper.

    A lawyer in David Dayen’s comments lays it out.

  136. 136
    Janus Daniels says:

    Obama Will Not Sign Bill Seen As Cover For Bank Foreclosures
    First Posted: 10- 7-10 10:37 AM
    http://www.huffingtonpost.com/.....53987.html
    FWIW

  137. 137
    Steve says:

    @The Raven: That doesn’t make any sense, and that lawyer is, to be frank, smoking crack.

    The sole purpose of a notary is to say “the person signing this document is who they claim to be.” That’s it. A lax notary requirement could make it easier for you to submit a forged affidavit, but you’re still going to end up in big trouble for submitting it. No one is going to organize their business model around perjury.

    Let’s say I’m suing you, and I submit an “Affidavit of Bob Smith” in support of my case. The purpose of the notary requirement is so the court knows that Bob Smith really signed the affidavit. If he didn’t – maybe he knows nothing about it, because I forged his signature – then I’m in big trouble with the court. It makes no difference that I got a notary stamp from some state with lax requirements, I still forged a court document.

    The reason I say that lawyer is smoking crack is because he assumes that this law serves not only to authenticate the Bob Smith affidavit, but also to ascribe some magical you-cannot-challenge-this property to whatever underlying documents are attached to the affidavit. That’s simply not what a notary does.

    The scenario being described is that the foreclosure mills will all relocate to Utah, where anybody can pick up a notary stamp at the corner drugstore, and judges around the country will say “well gosh, this document was notarized in Utah, even though it’s written in crayon on a grocery bag I guess I have no choice but to grant judgment for the plaintiff!” That’s as silly as it sounds.

  138. 138
    Tonal Crow says:

    @Steve:

    A lax notary requirement could make it easier for you to submit a forged affidavit, but you’re still going to end up in big trouble for submitting it. No one is going to organize their business model around perjury.

    Anything that makes it easier to submit a forged document will cause more forged documents to be submitted. And when one side is badly represented (or unrepresented) — as is frequently the case in foreclosures — many of these forgeries will never be challenged. Thus the forger, those who assisted her, and those who presented her forgeries will often not get caught at all, let alone “end up in big trouble”.

    As for no one organizing a business model around perjury, it would seem that a not inconsiderable number of foreclosing mortgage servicers have submitted many false affidavits.

  139. 139
    Mnemosyne says:

    @Glenndacious Greenwaldian (formerly tim):

    I’m sure President Obama knew nothing about this bill or this issue, in any way, shape, or form before it appeared on his desk. I am also certain that he is shocked, shocked I tell you, to read what it contains.

    Sounds like he was shocked to see what it contains since he refused to sign it.

    Oh, sorry, I guess that doesn’t quite fit your narrative, does it? Reality has a tendency to do that. I’m sure you’ll figure out some way to make this all Obama’s fault, though. I believe in you.

  140. 140
    Steve says:

    @Tonal Crow: Of course people try to get away with fraud all the time. But the idea that people are going to start setting up companies in Utah so they can get away with submitting false notaries is just whacked. It makes no sense.

    I’m not advocating for this bill, which seems to be a solution in search of a problem at best. But the bill has become the blogospheric equivalent of all those Bush executive orders that were supposed to let him bomb Iran and declare martial law and cancel the 2008 elections and all that. Never happened, but once the blogs get going on one of these things, it’s impossible to stop.

    Here is the basic problem with the whole parade of horribles that everyone is trotting out to argue that this bill would be the end of the world: Almost every state already recognizes out-of-state notaries, including electronic notaries. Yes, there would be less fraud (less commerce, too) if every single document and affidavit had to be personally signed in front of a notary who recognized the signer. But that ship sailed long ago.

    What the foreclosure mills have done in these publicized cases is submit evidence that is false in and of itself. This has nothing to do with notary fraud and moving to Utah will not make it any easier for them to do it.

  141. 141
    Paula says:

    @Mnemosyne:

    Naw, you’re making it too complicated …

    it’s just Obama throwing a bone to the base, losers.

  142. 142
    Don says:

    The Pale Scot said “This is a huge problem that the banksters are trying to paper over.”

    Well then they’re enormously prescient. If you look at the House floor transcripts for this bill you find that the first hearings where it was discussed were in 2006. One of the supporters – 2 are D, 2 are R – makes claim that it’s a problem that was brought to her attention first in 1997.

    I don’t doubt this could be used for ill and I wouldn’t necessarily put it past someone somewhere being responsible for giving it a kick in the pants because they thought it would add an arrow to their quiver in dealing with this situation. But pointing at it as a sign of big conspiracy seems nuts.

    And honestly, what is the adverse impact we’re imagining is going to happen here? I’m delighted to see the banksters who took unnecessary risks take it in the pants. But they’re not the only people potentially harmed by these efforts to push back on bad documentation for mortgages.

    Put aside the question of whether it’s a good thing to allow people unable to pay these mortgages to luck into a free home. I don’t lose any sleep over that binary a competition – if it’s a family suckered into a bad loan prevailing and the folks who wrote a bad loan losing then hey, great. Except that’s not all that this situation potentially results in. Other possible losers are:

    * Someone who buys the house after foreclosure. Think that house you just purchased is yours? Think again if we can invalidate these past contracts. Even assuming this gets covered by title insurance it’s not like there’s no cost involved with buying a house. Equally innocent folks could find themselves screwed by this situation if clear titles aren’t protected.

    * All of us! As we hope for a recovery and for these foreclosures to re-enter the market and the housing sales to be a part of the economy we find ourselves with something here that might scare people from purchasing homes, either for residence or as investors.

    * More of all of us! If these mortgages are invalidated and no recourse exists at all against the money that was handed out then even more mortgage bonds are going to turn toxic or turn toxic faster. Many of those bonds were bought by people with perfectly innocent intent, relying on the it-turns-out-now garbage ratings from fraudulent rating agencies. But it’s not the ratings agencies that are going to suffer when the bond dries up.

    On the other side is folks who got suckered into a mortgage and are now in a house they can’t afford. I think we’ve done poorly by these folks overall and I wish we had cramdowns. But when I compare the repercussions and consequences I’m not horribly torn here – for people who can no longer pay for their house to have to leave it may be a tragedy without being an injustice. Compared against throwing a monkey wrench into an economy that can’t afford it and creating financial ruin in pension funds and retirement accounts this doesn’t seem like an even comparison.

  143. 143
    Tonal Crow says:

    @Steve:

    What the foreclosure mills have done in these publicized cases is submit evidence that is false in and of itself. This has nothing to do with notary fraud and moving to Utah will not make it any easier for them to do it.

    They have not only submitted false evidence, but submitted, for example, evidence prepared on date D1, but purporting to be notarized on date D2 < D1. That is exactly notary fraud, and changing rules to make notary fraud easier will certainly not discourage this practice.

  144. 144
    sparky says:

    @Don: with respect, that’s not the issue here. the issue is that in securitizing mortgages, financiers chose to ignore/flout real property laws–which are a matter of state law, and though rather quaint and parochial in many respects, are the foundation for a functional civil society. and now that the market has collapsed, they have been caught trying to save their asses by committing fraud on the courts, or, as here, changing the rules.* at the end of the day, this is the question: is the US still going to have a legal system, or not? so far, the answer appears to be “not really”, in the financial sector, as in the area of civil liberties. increasingly, the US legal system is coming to look more and more like a hollowed-out shell, where the rules are rewritten at the behest of the rulers to benefit themselves.

    *this “law” is all about making it easier for someone to rubber-stamp affidavits filed in foreclosures–who has time to read 18,000 affidavits each month? nobody, that’s who, but this statute purports to obviate the problem, or, if you prefer, grease the skids. it certainly would operate to override any state requirement that an affidavit be notarized by a person, by hand, as, for example, Florida law requires.

    edit: @Tonal Crow: i’d say what this law does is to attempt to remove notary fraud/improper notarizations/improper affidavits as a ground to challenge a foreclosure proceeding. anyone who argues to the contrary is not paying attention, at best.

  145. 145
    Aaron Fown says:

    Please give me a moment, and I will share my understanding of the issue; boiled down, many of the banks were slicing and dicing mortgage debt into lots of ‘sausage’ bets. Sort of like being able to dice up one piece of meat into ten pieces of sausage, except in the case of the banks they got to magically keep the meat too, in the form of the base asset (the deed and mortgage) itself. Or they could sell it. Whatever.

    In order to make this easier, a set of electronic notaries were set up to handle those transactions. This had the effect of simplifying the arcane procedure that making complex financial instruments across jurisdictions would be if you had to use living, breathing notaries to transfer title. Some of these titles have been transferred dozens, even hundreds of times in their recent history! Essentially, they had figured out a method to print money in the form of debt and bets on bets. Cha-ching!

    Then the mortgage collapse happened. But they kept their derivative instruments from exploding due to a big infusion of raw money from the taxpayer, and then went about using the same machine to pay back the taxpayer. Well mostly, kinda. Anyhow, everything seemed to be moving smoothly. Back to business, right?

    It might have even worked, given the lack of oversight in the financial industry, but there was one small flaw in the plan; MERS and the other electronic notaries aren’t legal. They are essentially forging court documents on a large scale, and the result is that the court is deluged when something comes to foreclosure, since there is no clear title, and the chain of possession has been broken. Now several states have ruled outright that these electronic notary documents are not evidentiary, and don’t prove conclusively chain of possession. This little mistake in their master plan has shut down the whole foreclosure system in many states, and that’s not the real problem for them. The real problem is the rotting sausage. . .

    If they can’t prove possession, then all of those derivatives on those mortgages turn into so much casino toilet paper, because the bets will unravel completely without possession of either the base asset or the payout on the loan. And those derivatives have blossomed into an unimaginably large amount of ‘value’, totaling by some good estimates over a quadrillion dollars ($1,000,000,000,000,000+). If that big pile of debt explodes, then it will be the end of the western financial system. Every financial institution of any significance will be unable to meet their obligations, and the result will be systemic bankruptcy.

    One sentence explanation; they need to run this bill through as quick as possible so that the magnitude of their fraud is not exposed, and the financial system doesn’t implode. The real question is, is it in our interest for the financial system as it is, so rife with fraud and thievery, to continue? I really don’t know the answer to that question. On one hand, I dislike fraud and thievery. On the other, I like having food and toilet paper.

    I usually sign in under a pseudonym, but I am not today. This is far too important, and I want people to understand how big this problem is. The big picture of the financial system goes a long way towards explaining the actions of the powerful, though I don’t think it really excuses them.

  146. 146
    Zuzu's Petals says:

    @Steve:

    Thanks. Of course that doesn’t address the issue here: mortgage documents. Which it looks like may be covered under ESIGN.

    I’m not sure court docs are even covered under this bill, which refers only to “electronic records” as defined in ESIGN.

  147. 147
    sparky says:

    short clarification: what i meant by the above is that the banksters pretended/acted as if mortgages for real property were akin to other kinds of financial transactions, for example securitized transactions for goods (covered by the UCC as adopted by each state). the problem is that real property is different–it’s fixed, and remains under the jurisdiction of the state where the property is located, and the laws pertaining to real property are not the same as for other items (chattel, etc.).

    so it’s not the underwater borrowers who made this mistake, but the banksters, who thought they could bundle mortgages without observing the formalities. oopsie.

    thus this is not a borrower v. the banks issue: it’s a banks v. the legal system issue. for the most part, i’d say the banks are winning, at least so far. but then we’d expect that in a true oligarchy/banana republic.

  148. 148
    Zuzu's Petals says:

    @sparky:

    Well, Florida law explicity provides for recognition of electronic notarization of documents sworn under oath:

    S. 668.50 …(11) (a)  If a law requires a signature or record to be notarized, acknowledged, verified, or made under oath, the requirement is satisfied if the electronic signature of the person authorized by applicable law to perform those acts, together with all other information required to be included by other applicable law, is attached to or logically associated with the signature or record. Neither a rubber stamp nor an impression type seal is required for an electronic notarization.

  149. 149
    Zuzu's Petals says:

    @sparky:

    edit: @Tonal Crow: i’d say what this law does is to attempt to remove notary fraud/improper notarizations/improper affidavits as a ground to challenge a foreclosure proceeding. anyone who argues to the contrary is not paying attention, at best.

    But as the bill only requires recognition of legal notarizations, it’s hard to see how it precludes a challenge of a fraudulent or improper notarization.

  150. 150
    Steve says:

    @sparky:

    edit: @Tonal Crow: i’d say what this law does is to attempt to remove notary fraud/improper notarizations/improper affidavits as a ground to challenge a foreclosure proceeding. anyone who argues to the contrary is not paying attention, at best.

    Uh, of course you can challenge the documents as fraudulent. The only potential defense it removes is “that document was notarized in another state, so it’s automatically invalid even if it’s genuine.” Again, what part of “almost every state already recognizes out-of-state notaries” is difficult to understand?

  151. 151
    Don says:

    with respect, that’s not the issue here. the issue is that in securitizing mortgages, financiers chose to ignore/flout real property law

    I’m not sure I understand what the issue is, then. It’s not what you assert – there’s no credible evidence that the impact of this bill would be to allow baloney through. There is certainly evidence that this isn’t a bill that just popped up one day purely because of this bad paper issue.

    So what we’re left with is (a) a left-wing conspiracy freakout and (b) a question as to whether this bill, which is supported by various organizations not immediately interested in the outcome of these sketchy mortgage documents, could have a side-effect of making some of these lawsuits go easier.

    (A) is showing every sign that it isn’t supported by the evidence. See earlier comments about 2006 hearings etc.

    (B) means we need to have an honest conversation about whether there’s a valid purpose to this bill other than to benefit banksters and whether it will have side effects. If so, are the side effects so bad that they justify not solving the actual problem.

    If you cannot believe anything other than that this is a bankster giveaway then there’s really nothing to say. Having been a notary long ago in Florida and having had things notarized in other states and dealt with some uncertainty about sending them to yet other states… I’m inclined to say this passes the smell test. As Zuzu says, it doesn’t seem that this is a blank check to prevent any challenging of documents.

  152. 152
    The Pale Scot says:

    Too dismissive Don.

    Mike Konczal
    http://rortybomb.wordpress.com.....nightmare/

    “if you care about basic Western liberalism–the classical kind, with a Lockean understanding of freedom to own property along with freedoms of speech and religion– you should be pissed off. This is a clear-cut instance of the rich and powerful decimating other people’s property rights, rights that are supposed to protect the weak from the strong, in order to preserve their wealth and autonomy. Unless you think property rights are mere placeholders for whatever the financial sector demands are, this should be resisted. This should be viewed as a problem an order of magnitude larger than Kelo v. City of New London.”

    And google the term “taking the loan to the art dept”

    Permabears such as Roubini and hard money guys like the Cunning Realist have been saying that the foundations of currency value are being undermined. This isn’t just in a small subset. Without clear titles there’s no title insurance, without insurance the value of the property is mere vaporware. They’re not reconstructing titles, they’re fabricating them out of thin air. There is no paper trail. Yes some states require acceptance of MERS, but that was suppose to facilitate speedy dealmaking, you still need to bring dead tree docs to the court, a electronic receipt with no signatures or notary stamp will not stand, unless this bill went thru.

    MERS is an invention of the RE industry, it’s not legal structure under the security of a government agency.

  153. 153
    Steve says:

    @The Pale Scot:

    Yes some states require acceptance of MERS, but that was suppose to facilitate speedy dealmaking, you still need to bring dead tree docs to the court, a electronic receipt with no signatures or notary stamp will not stand, unless this bill went thru.

    There is NOTHING in the bill that eliminates any state requirement for original documentation. Enough of the overblown conspiracy rhetoric already.

  154. 154
    The Pale Scot says:

    Baby steps Steve, they’re taking baby steps.

    But your right, that was a throw in line. Sorry

    My point is the FIRE industry is trying to loosen the rules establishing ownership of property, and with the Feds admission that it’s inflating the money supply to support asset value instead of priming the economy, I wouldn’t have any confidence in buying a property at this time.

    Down here in FL, the banks are breaking into houses they don’t own trying to assert ownership the don’t have.

    Bank of America forecloses on house that couple had paid cash for

    Bank changes locks on occupied homes in foreclosure

  155. 155
    Don says:

    This is a clear-cut instance of the rich and powerful decimating other people’s property rights, rights that are supposed to protect the weak from the strong, in order to preserve their wealth and autonomy.

    Except that it’s not.

    You link to a BoA screwup where they went after the wrong house but that has no connection to the matter at hand here, nor does the story about taking without proper eviction process.

    “Taking the loan to the art department” refers to the process where sleazy mortgage companies fabricated documents to get people loans they shouldn’t have had. It’s a horrible thing but you’re essentially suggesting that the compensation for that misbehavior is that the people put in those loans they can’t pay is that they get a free house.

    It’s just not reasonable. I’m happy to see the banksters take a few on the chin but this suggestion that there’s some great justice happening when a foreclosure fails because they can’t follow the title chain is just false. They are still cases where the family in the home is not able to keep up with the mortgage. There is nothing morally wrong about foreclosure in that case. It is, as I said, tragic but not unjust.

    Demonstrate to me that they’re using this process to prevent people from keeping their homes via bankruptcies and engaging in that sort of shenanigans and fine, I’ll be concerned. Get congress to pass a sensible cram-down allowance and I will cheer.

    But this idea that you can’t enforce collection on a mortgage? It’s just not right or reasonable. It’s not fair either to all the other sectors of the economy that suffer as a result of it. It harms recovery in the mortgage market on a multitude of levels and harms bond holders who are just as innocent as the people being foreclosed upon.

  156. 156

    […] the only possible explanation for a law that buzzed through the Senate without anyone seeming to know anything about it. Reuters says (emphasis mine): “The legislation could protect bank and […]

  157. 157
    Tonal Crow says:

    @Don: However, a great justice does occur when a party that cannot show that it has standing to foreclose is prevented from doing so.

    And a great injustice occurs when such a party is permitted to foreclose. Plus, this injustice potentially endangers buyers of the improperly-foreclosed property, and (more broadly, and more importantly to Republicans) the markets in which these buyers participate, their title insurers, the bankers who write their loans, and the investors who buy the bonds into which those loans are securitized.

  158. 158
    The Pale Scot says:

    Don, that’s not the point, I don’t care about the borrowee, he’s underwater to somebody. The issue is who?

    There’s the opportunity for unscrupulous players to act as the Enron traders did, and end up warping the market.

    Your trying real hard to stay focused on somebody getting a house for free, and avoiding the implications of 3rd party title insurers leaving the market

  159. 159
    Perry Como says:

    @Steve: No one is going to organize their business model around perjury.

    Steve, meet DOCX, DOCX, Steve.

    The parent company of DOCX, Lender Processing Services, has been hit with two class action lawsuits for…forging mortgage documents. It seems like at least one multi-billion dollar company has organized its business model around perjury.

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