Obama Won't Sign Foreclosure Bill

The Wall Street Journal reports that President Barack Obama is not expected to sign legislation passed by Congress before it adjourned last week that would have forced states to recognize out-of-state notarizations of foreclosure documents. Obama will use the "pocket veto" method to effectively kill the bill.

The bill, which was passed without public debate, became a contentious issue after it was reported this week that GMAC Mortgage, JP Morgan and other mortgage companies would halt foreclosure proceedings in several states -- including Florida -- due to the faulty and perhaps fraudulent signing of foreclosure documents. The legislation also would have protected the companies from liability for using "robo-signers" to validate thousands of documents each week.

Florida Attorney General Bill McCollum's office is currently investigating four law firms suspected of creating or filing improper documentation in order to speed through foreclosures.

"While it is important that the mortgage foreclosure process move forward, it must be with the assurance that the legal rights of those facing foreclosure be protected and that the courts are assured that the documents on which they are basing their decisions are true and accurate," Ryan Wiggins, McCollum's communications director, wrote in an e-mail.

The stoppage of foreclosure proceedings across the country is expected to delay hundreds of thousands of home sales, putting a dent in the hopes of a vibrant economic recovery on the horizon.