Industry News, Mortgage, Story

‘Robo signing’ scandal kills notary bill

Civil rights groups calling for national foreclosure moratorium

Exercising a "pocket veto" for only the second time in office, President Obama Thursday rejected a bill that critics said would help banks push homes through the foreclosure process by making courts recognize notarizations made in other states.

HR 3808, The Interstate Recognition of Notarizations Act of 2010, sailed through Congress before the "robo signing" scandal erupted. In a statement, the White House said the president would not sign the bill, because 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."

In another, unrelated development, the Center for Responsible Lending and civil rights groups including the NAACP and National Council of La Raza renewed their call for a national moratorium on foreclosures, citing doubts about procedures followed by lenders filing foreclosure proceedings.

"Until lenders demonstrate that they are adhering to all existing laws, regulations, and contractual guidelines related to loss mitigation and foreclosure legal process, lenders in all 50 states should not move forward with any foreclosures," the groups said in a press release renewing a call first made in April 2007.

The Center for Responsible Lending cited its own research that it said shows African-American and Latino borrowers are 75 percent more likely than whites to be foreclosed on. The higher the concentration of racial minorities in a community, the higher the rates of foreclosure, the group said.

Researchers at Princeton University’s Woodrow Wilson School recently published a study asserting that segregation in African American and Hispanic neighborhoods are predictors of the number and rate of foreclosures.

In a research paper sponsored by the Mortgage Bankers Association, George Washington University Prof. Anthony M. Yezer questioned the statistical techniques used in many studies that look for signs of discrimination by lenders.

Yezer argues that such studies typically don’t take into account the motivation of borrowers, who may "self-select" into particular loan programs with higher mortgage rates and higher rejection and default rates.








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