I’ve received a lot of correspondence about HR 3808, a bill about electronic and out-of-state notarization that Reuters wrote could make it harder in the future to challenge foreclosures.

A bill that homeowners advocates warn will make it more difficult to challenge improper foreclosure attempts by big mortgage processors is awaiting President Barack Obama’s signature after it quietly zoomed through the Senate last week.

The bill, passed without public debate in a way that even surprised its main sponsor, Republican Representative Robert Aderholt, requires courts to accept as valid document notarizations made out of state, making it harder to challenge the authenticity of foreclosure and other legal documents.

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.

The White House said it is reviewing the legislation.

OK, so everyone focuses on “how did this pass so quickly without anyone knowing about it!” But we might want to focus on the text of the bill. It’s very short. Other than the title and boilerplate, here’s the entire bill:

SEC. 2. RECOGNITION OF NOTARIZATIONS IN FEDERAL COURTS.
Each Federal court shall recognize any lawful notarization made by a notary public licensed or commissioned under the laws of a State other than the State where the Federal court is located if–
(1) such notarization occurs in or affects interstate commerce; and
(2)(A) a seal of office, as symbol of the notary public’s authority, is used in the notarization; or
(B) in the case of an electronic record, the seal information is securely attached to, or logically associated with, the electronic record so as to render the record tamper-resistant.

SEC. 3. RECOGNITION OF NOTARIZATIONS IN STATE COURTS.
Each court that operates under the jurisdiction of a State shall recognize any lawful notarization made by a notary public licensed or commissioned under the laws of a State other than the State where the court is located if–
(1) such notarization occurs in or affects interstate commerce; and
(2)(A) a seal of office, as symbol of the notary public’s authority, is used in the notarization; or
(B) in the case of an electronic record, the seal information is securely attached to, or logically associated with, the electronic record so as to render the record tamper-resistant.

SEC. 4. DEFINITIONS.
In this Act:
(1) ELECTRONIC RECORD- The term ‘electronic record’ has the meaning given that term in section 106 of the Electronic Signatures in Global and National Commerce Act (15 U.S.C. 7006).
(2) LOGICALLY ASSOCIATED WITH- Seal information is ‘logically associated with’ an electronic record if the seal information is securely bound to the electronic record in such a manner as to make it impracticable to falsify or alter, without detection, either the record or the seal information.

That’s it entirely. Out of state notaries can notarize documents, including with e-signatures. And there’s a serious split in the legal community over whether this would mean anything to the foreclosure mess.

Basically, notarization means that a notary public witnessed the act of signing and identified the signer. If a document is fraudulent, whether the notarization came from in state or out of state is of little consequence. The Reuters article says this act would “make it harder” to challenge foreclosure documents without saying how. In fact, nobody has properly explained how this would make it more difficult. The legal term of art is that notarization gives something the “presumption of truth” and the “presumption of validity,” but those terms don’t appear in this bill, and the foreclosure documents being challenged were already notarized. The banks are already doing fraudulently what some in the legal community fear they would be doing fraudulently if this bill passes.

Most important, this bill would take effect after signage, and I’m at pains to figure out how the millions of foreclosures and their documents already filed would be affected by this in any way. I see nothing about retroactivity in here.

It seems to me that some lawyers may have used the notarizations issue to get at the broader fraud, like a cro-bar to pry open the door. And going forward, the cro-bar may not be as available, though I’m still trying to figure out why. But that doesn’t impact what’s already been done. I cannot see my way clear to calling this TARP 2 based on the given information.

I am not a lawyer, and it’s entirely possible I’m missing something. The Secretary of State of Ohio, Jennifer Brunner, seems to have a problem with it, but again, in her entire statement, I can’t pick out anything that would actually be a problem, instead of some shadowy, undescribed menace. And the Ohio Attorney General, who is likely to have had knowledge of this issue, had no problem filing a lawsuit yesterday against GMAC.

I’ll be doing some more digging on this today. I’m sorry if this answer is unsatisfactory, but in the comments, I’d like anyone to specifically tell me how HR3808 would 1) affect foreclosure document fraud that has already been committed, and 2) affect it going forward.

UPDATE: OK, Armando, who is involved with some of these cases, has given the best explanation of why this bill could represent a hindrance:

What has been happening around the country in foreclosure proceedings has been the denial of due process for homeowners who want to challenge the veracity and validity of the evidence that the foreclosing parties have been introducing as evidence. This law will only exacerbate this problem.

At the very least, a legislative history and clear definition of what Congress means by the term “recognize” is required. The President must veto this bill and send it back to Congress so it does its work of properly drafting this legislation.

As he says, it all hinges on the meaning of the term “recognize.” You could read that as simply that an out-of-state notarization would have the same standing under the law as an in-state notarization. Armando seems to be saying it could be construed to view a notarized document as a public record, leading to their blanket acceptance without challenge. More here.

Again, how would this affect current cases and current challenges with documents under the old rules?