WASHINGTON — President Barack Obama will veto a bill that he fears could be misused to force more homeowners into foreclosure.
Originally the measure, which makes it easier for notarized documents to be accepted across state lines, was thought to be non-controversial and passed with bipartisan support in Congress. However, White House Press Secretary Robert Gibbs said Thursday that there are now concerns that its language could cause "unintended consequences" damaging to consumers, especially homeowners.
Three large national banks have recently halted foreclosures in 23 states in light of evidence of flawed documents or improper procedures. In that context, Obama is asking Congress to go back to the drawing board on H.R. 3808, the "Interstate Recognition of Notarizations (IRON) Act of 2010."
Consumer advocates said that Obama was right to be cautious.
"With numerous state attorneys general investigating systemic illegal foreclosure filings and misrepresentations, it is entirely appropriate" to veto the legislation, said Ed Mierzwinski, the consumer program director for the U.S. Public Interest Research Group.
Ira Rheingold, the executive director of the National Association of Consumer Advocates, said that most consumer advocates weren't tracking the legislation earlier this year and that he doesn't think the legislation was crafted to hurt homeowners. Still, he said, "There is a danger the courts will say, 'Well, this is a notarized document and therefore I'm going to let it into evidence' and allow a home to be foreclosed, even though the underlying facts aren't true."
White House Communications Director Dan Pfeiffer said in a blog posting that lawmakers promoting the legislation "no doubt had the best intentions in mind" and that Obama wants to work with them to find a way to help interstate commerce without making homeowners more vulnerable.
Gibbs said that Obama would exercise a pocket veto, which is an indirect way to veto a bill by not acting on it within 10 days of Congress adjourning. It's Obama's second such veto. The first, in 2009, was triggered by a technicality in a defense spending bill.
There's some question about whether the pocket-veto rule can be met in this case, because the Senate technically isn't adjourned, although most senators are out of town. Gibbs said it was his understanding that the president can exercise a pocket veto anyway, but added that the White House also could send the bill back to Congress to avoid any challenge.
Rep. Robert Aderholt, R-Ala., said in a statement that there is "absolutely no connection whatsoever" between his bill and "the recent foreclosure documentation problems."
Aderholt said he'd first introduced the measure five years ago, before the foreclosure crisis and related scandals, and that he's "disappointed" in the veto and feels it's a matter of a "misunderstanding."
The National Association of Realtors, Compass Bancshares, homebuilders and the manufactured housing industry have been among Aderholt's 20 largest contributors during his tenure in Congress, according to the nonpartisan research group Center for Responsive Politics.