Motley Moose – Archive

Since 2008 – Progress Through Politics

The Curious Case of HR 3808

Back in April the House of Representatives passed a bill known as HR 3808, the Interstate Recognition of Notarizations Act of 2010 and sent it to the Senate where it languished in the Judiciary Committee until late September.  The circumstances of the passage of this bill in the Senate are curious, to say the least.  It was discharged from committee and passed by unanimous consent, with no debate, just as the 111th session of Congress was coming to a close.

The bill is relatively simple:

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.

Superintendent of Documents – H. R. 3808 GPO 111th Congress

Seems pretty innocuous, really, but in the context of emerging reports of foreclosure fraud at the time it qualified for notorious distinction as the ‘silver bullet’ which banks were hoping would solve their documentation problems and earned itself a presidential veto.

Foreclosure proceedings have been problematic since the beginning of 2009; for defaulting borrowers, mortgage servicers, judges and attorneys general.  Depositions taken last February clearly exposed the practices surrounding ‘robo signing’ among third-party law firms acting for the banks and the compelling financial incentives that were offered to clear the toxic inventory of bad mortgages.  We have depositions under oath that notarisation was pro forma afterthought to the bulk signing of affidavits by harried legal staff attesting to the accuracy of lost or missing ‘notes,’ sometimes not even bearing their own genuine signature.

When HR 3808 sailed through the Senate on 27 September it set off alarm bells at the state level among those already familiar with the output of the ‘foreclosure mills.’  Ohio Secretary of State Jennifer Brunner made a splash in early October with a very public opinion within a directive on the qualifications of voters who have been foreclosed:

…asking Ohioans to contact President Obama and urge him to not sign a bill passed by both houses of Congress that recognized notarized documents from other states, including ones that contain electronic notarizations that are not subject to the same consumer safeguards of documents notarized in person.

John Michael Spinelli – Roll [sic] of notary publics in home foreclosure mills prompts response from Ohio SOS Columbus Examiner 5 Oct 10

And why?  Because she seemed to have a pretty strong opinion that the electronic notarisation proposal was yet another artful dodge:

In her directive she said that she has referred specific instances of notary abuse occurring at Chase Home Mortgage in Columbus and by the Mortgage Electronic Registration Systems, Inc. (MERS) to a federal prosecutor for investigation.

Brunner said in a statement, “Mortgage foreclosure documents must be notarized according to the law. Requiring this is not an afterthought or an exercise of form over substance – the law must be followed when taking away someone’s home, regardless of the circumstances.”

John Michael Spinelli – Roll [sic] of notary publics in home foreclosure mills prompts response from Ohio SOS Columbus Examiner 5 Oct 10

There are states’ rights issues here to consider, to be sure, but the timing is interesting as the foreclosure mess was just percolating up into the national media when the measure was passed:

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 September 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.

Scot J Paltrow – Bank foreclosure cover seen in bill at Obama’s desk Reuters 6 Oct 10

It is hard to avoid the impression that something had changed the political or legal context surrounding this particular legislation:

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.

Scot J Paltrow – Bank foreclosure cover seen in bill at Obama’s desk Reuters 6 Oct 10

One would be forgiven for wondering whom these “constituents” might be, under the circumstances:

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.

Scot J Paltrow – Bank foreclosure cover seen in bill at Obama’s desk Reuters 6 Oct 10

Who says bipartisanship is dead?  Not where the appropriate constituency is concerned, apparently.  As it turns out, Obama vetoed the measure, much to the relief of many, but the question remains just whom our elected representatives are really working for, on both sides of the aisle.  The implications were not lost on the White House:

Today, the White House announced that President Obama will not sign H.R. 3808, the Interstate Recognition of Notarizations Act of 2010, and will return the bill to the House of Representatives.  The Interstate Recognition of Notarizations Act of 2010 was designed to remove impediments to interstate commerce.  While we share this goal, we believe it is necessary to have further deliberations about the intended and unintended impact of this bill on consumer protections, including those for mortgages, before this bill can be finalized.

Dan Pfeiffer – Here’s Why Obama Is Vetoing HR 3808 The White House 7 Oct 10

Seems everyone understands the game.  So how come both parties were in on this together thick as thieves?

Cross-posted at Daily Kos and Red State


  1. according to Both senators raised the most money from lawyers/law firms. Leahy received $157,500 from securities and investment firms compared to $900,000+ from lawyers. Sessions received $187,000 from commercial banks compared to $418,000 from lawyers/law firms. Both men are ranking members of the Judiciary committee, which explains the donations from the legal community. Neither seems to be overly dependent on FIRE donations.  

  2. Shaun Appleby

    The DNC and the DCCC both have multi-million dollar lines of credit from Bank of America, the latest $17 million for the DCCC just this month:

    What was their collateral? It turns out, not much.

    The DNC claims their collateral was an intangible piece of property – its donor mailing list. The DCCC only cites unnamed assets.” Neither party organization possesses real estate even close to cover the $32 million. The DNC’s headquarters is owned by another entity. Even it was put up as collateral, its market value was last estimated at only $13.7 million.

    Richard Pollock – Did the DNC Get an Illegal Campaign Loan from Bank of America? Pajamas Media 27 Oct 10

    Not in the habit of citing Pajamas Media, mind you, or suggesting this is an “illegal” campaign donation, but these are strange and troubling days.  Pajamas Media seem to have done their homework on this:

    The DNC loan agreement as posted online by the Federal Election Commission (FEC) and signed by former Virginia Governor Tim Kaine (D) on September 16, 2010, says the loan collateral included: “All electronic mail (‘E-mail’) addresses and other contact lists, records and other Information (electronic or otherwise) relating to contributors, supporters and subscribers owned by any of the Borrowers.” The borrowers in this case were the DNC and the DNC Services Corporation.

    Richard Pollock – Did the DNC Get an Illegal Campaign Loan from Bank of America? Pajamas Media 27 Oct 10

    Hmmm…  You’ve just been collateralised, folks.  You don’t suppose BoA had an interest in the HR 3808 legislation, do you?  Nah.  Please, somebody, debunk this for me.  I’m getting nervous.

  3. Shaun Appleby

    Of what we are up against.  Brooklyn Supreme Court Justice Arthur Schack has been an early and prolific dissenter on the foreclosure cases presented in his court.  In a recent decision he has strongly criticised the documentation and standing of the plaintiffs:

    Shack’s opinion, released by the courts Tuesday, is the most detailed picture yet of the shoddy or fraudulent mortgage paperwork too many of those lenders used.

    This is not just a matter of minor technicalities, as the banks and their spin masters want us the believe – the same ones who told us the subprime crisis would blow over.

    At the heart of the Drayton case is an Austin, Tex., robo-signer named Erica Johnson-Seck. In July, Johnson-Seck admitted in a Florida deposition in another case that she “executes 750 foreclosure documents a week; without a notary present; does not spend more than 30 seconds signing each document; [and] does not read the documents before signing them,” Schack noted.

    Johnson-Seck’s signature appears repeatedly in documents connected to Drayton’s mortgage, and in several other foreclosure cases Schack dismissed in the past three years.

    At different times, she signed notarized documents assigning the loan, claiming to be a vice president of MERS (a private financial recording service for major banks), a vice president of INDYMAC, a vice president of Deutsche Bank and a vice president of OneWest.

    She also claimed to have “signing authority” from several banking institutions, including the Federal Deposit Insurance Corp., Bank of New York and U.S. Bank, noting, “That’s all I can think of off the top of my head.”

    Juan Gonzalez – Brooklyn judge Arthur Schack is a local hero, decision casts light on fraudulent mortgage paperwork Daily News 28 Oct 10

    You can see why HR 3808 made some people nervous about the rule of law and out-of-state depositions and notarisations.

  4. Shaun Appleby

    For the vote of confidence, Fogiv, but I’m not sure I intended this little piece as front-page material and I am happy to rock my hobby-horse here but certainly don’t want to take the Moose places it may not want to go.

    I have a few more diaries on the whole foreclosure mess in the pipeline and in some respects would feel more comfortable posting them in the context of sub-theme among other deserving diaries on other subjects.

  5. Shaun Appleby

    Maintained assertively that there were no problems with it’s foreclosure documents when the other majors got spooked recently.  Today, however:

    CHARLOTTE, N.C./SAN FRANCISCO (Reuters) Wells Fargo & Co. said on Wednesday it will re-file documents on 55,000 foreclosures, drawing immediate fire from one of the state attorneys general most critical of banks in the continuing home foreclosure crisis.

    The announcement was the first admission of possible problems in the way the San Francisco-based bank repossesses homes.

    Wells Fargo – the second largest U.S. home mortgage servicer – has continued to foreclose on delinquent borrowers in recent weeks, even as its rivals instituted moratoriums amid a public furor over whether banks cut corners in the foreclosure process with so-called “robo-signers” of legal documents used to justify taking homes.

    Joe Rauch and Dan Levine – Wells Fargo To Amend 55,00 Foreclosures Reuters via Huffington Post 28 Oct 10

    Nothing to see here, folks.  Just fifty-five thousand questionable foreclosures.  Sheesh.  And it is worth noting that all of the majors only halted foreclosures in the ‘judicial’ states, where they are actually required to make appearances and submit documents in a courtroom before a judge.  Seems an amazing coincidence that those are the only states where they had documentation issues, doesn’t it?

    I’m guessing the chances of this whole mess blowing over are rapidly diminishing to nil.

  6. Shaun Appleby

    Them’s fighting words:

    “These people think they can play by a different set of rules,”  [Ohio Attorney General] Cordray said in an interview today on Bloomberg Television’s InBusiness with Margaret Brennan.  “It’s not just individuals who signed flawed affidavits.  It’s a business model designed on fraud.”

    Michael Riley and Margaret Brennan – Wells Fargo to Be Focus of Ohio Foreclosure Probe Bloomberg 28 Oct 10

    Oh, boy.  Damn shame for the banks that there’s fifty attorney generals in the country just waiting for a grandstanding opportunity to further their political careers in the interests of the people.  Here’s hoping, anyhow.

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