President Obama Vetoed The Notarization Act Of 2010, Citing The Mortgage "Robo-Signing" Scandal
On September 27, 2010, the Interstate Recognition of Notarizations Act of 2010, HR3808, was passed by the Senate with unanimous consent. The Notarization Act would have required each federal and state court to recognize any lawful notarization occurring in or affecting interstate commerce which is made by a notary public licensed or commissioned under the laws of a state other than the state where the court is located. The Notarization Act was presented to President Obama for signature on September 30, 2010.
Around the same time, the “robo-signing” scandal was beginning to become daily news. In about half of the states, a bank must foreclose on real estate judicially. In the judicial foreclosure states an affidavit was often submitted by the lender attesting, among other matters, to the facts upon which the bank based its ownership claim and the calculation of the indebtedness claimed. The media at the same time was carrying news reports concerning bank employees who allegedly participated in notarizing affidavits without the required knowledge of the facts or records of concern, or who in other ways may have violated formalities of affidavit practice.
Consequently, the Notarization Act, a seemingly uncontroversial bill, was thrust into the public debate leading President Obama to veto the legislation on October 8, 2010. Dan Pfeiffer, the White House Communications Directors said the veto was necessary because “we need to think through the intended and unintended consequences of this bill on consumer protections, especially in light of the recent developments with mortgage processors.”1
The intended purpose of the Notarization Act was to ease interstate commerce. Currently, each state has separate laws governing notarizations and different technicalities that allegedly make it difficult for a state to recognize an out-of-state notarization. Yet, several states, including Ohio, Kentucky, Indiana, West Virginia, and Tennessee have legislation that recognizes an out-of-state notarization as long as the notarization was valid in the state it was executed in.2
Therefore, President Obama’s veto of the Notarization Act should not have a significant impact on the majority of states within Frost Brown Todd’s footprint. Specifically, affidavits that are properly notarized in any state in the country, in accordance with that state’s relevant law, should continue to be recognized in the courts, including those hearing foreclosure lawsuits, in Ohio, Kentucky, Indiana, West Virginia and Tennessee.
1 Pfeiffer, Dan, "Why President Obana is Not Signing H.R. 3808," http://www.whitehouse.gov/blog/2010/10/17/why-president-obama-not-signing-hr-3808 (Oct. 7, 2010, 13:15 EST).
2 See Ohio Rev. Code Ann. Section 147.51(A); Ky. Rev. Stat. Ann. Section 423.111; W. Va. Code Section 39-1A-1; Ind. Code 34-37-1-5; Tenn. Code Ann. Sections 66-22-103 & 66-22-115.
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William T. Repasky practices with the Litigation Department at Frost Brown Todd. He focuses on lending and commercial services; banking litigation and financial institutions.