Obama Hits Brakes on a Bill That Could Speed Foreclosures
U.S. President Barack Obama on Thursday vetoed a bill that would've required courts to recognize out-of-state foreclosure documents as valid. Putting the brakes on the bill, which the House of Representatives passed in April and the Senate approved last month, signals caution at a time when allegations of flawed foreclosure documents are popping up around the country.
Housing advocates have said that the bill would make it harder to challenge the validity of foreclosure-related documents, thereby speeding up the foreclosure process. Foreclosures are expected to reach 1.2 million homes this year as high unemployment and sagging home values leave many borrowers unable or unwilling to pay their mortgages.
"We have heard from officials around the country about the concern that they have about the possible unintended consequences of this legislation -- certainly in light of what we are seeing in the mortgage processing," White House Press Secretary Robert Gibbs said in a media briefing (via CNNMoney.com).
Some banks, including Bank of America (BAC), JPMorgan Chase (JPM) and Ally Bank subsidiary GMAC Mortgage, have suspended foreclosures in recent weeks to review allegations of inaccurate paperwork. The federal government is also investigating these allegations after a request from California's Democratic delegation.