Why Obama's Blocking Foreclosure Legislation

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The White House has announced that President Barack Obama will attempt to "pocket veto" a bill, passed by Congress, that would make it easier for banks to process foreclosures on homes. Foreclosures hit a record high in September as banks attempt to turn around homes on which owners have defaulted since the 2007 mortgage crisis began. Opponents of the measure warn it would allow banks to circumvent homeowner protection laws. The pocket veto allows Obama to indirectly block the bill's passage by refusing to sign it during a period when Congress is not in session. Why is Obama blocking the bill, how did it get to his desk, and what does it mean?

  • Why Obama Opposes  ABC News's Jake Tapper explains, "consumer groups and some state officials noted that the legislation could have the unintended consequence of exacerbating an ugly trend of unfair home foreclosures. By requiring the acceptance of out-of-state notarizations, the bill could make it more difficult for homeowners to challenge improper foreclosure attempts." Reuters's Scot Paltrow adds, "The timing raised eyebrows, coming during a rising furor over improper affidavits and other filings in foreclosure actions by large mortgage processors such as GMAC, JPMorgan and Bank of America. Questions about improper notarizations have figured prominently in challenges to the validity of these court documents, and led to widespread halts of foreclosure proceedings. The legislation could protect bank and mortgage processors from liability for false or improperly prepared documents."

  • Getting Proactive on Foreclosures  The Washington Post's Jia Lynn Yang writes, "The decision to block the measure, which Congress passed without debate, came as members of the president's own party have urged the administration and federal regulators to more actively address the crisis over flawed foreclosures. ... In the middle of a heated election season, a growing number of politicians have been eager to weigh in on the matter [of banks issuing questionable foreclosures] - and are taking pains to rebuke the financial institutions at the core of the controversy."
  • It's Strange That Congress Approved This  Reuters's Scot Paltrow says the bill "quietly zoomed through the Senate last week." It was "passed without public debate in a way that even surprised its main sponsor, Republican Representative Robert Aderholt. ... 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. The full Senate then immediately passed the bill without debate, by unanimous consent."
  • Why a Pocket--Not Regular--Veto  Congress Matters' David Waldman explains, "What difference does it make what kind of veto process is used? Well, the argument goes that a pocket veto might be final, and not subject to override. Why would a pocket veto be final? ... They're (metaphorically) in the President's pocket. Which means the Congress can't act to override the veto. ... A returned bill can get an override vote."
  • What Happens Next  Conservative legal blogger John Elwood writes, "Pocket vetos raise cause even more friction between the branches than the regular variety of veto because they turn on whether 'Adjournment prevent[s]' a bill’s return. But Congress has designated agents to receive returned bills during recesses, and so Members of Congress often argue that pocket vetos are ineffective. In an effort to make sure such bills are truly dead, presidents have taken to performing 'protective returns,' whereby they return the pocket-vetoed bill with a 'memorandum of disapproval' for the stated purpose of 'leav[ing] no doubt that the bill is being vetoed' (to quote President Obama’s first Memorandum of Disapproval). The $64,000 question is what happens if Congress purports to override a pocket veto, and someone has standing to get the issue into the courts. But this is a relatively good time for the President to attempt such a gambit, at the beginning of a six-week recess, with congressional majorities of the President’s own party preoccupied with the coming midterm elections."

This article is from the archive of our partner The Wire.