President Obama will not sign legislation approved by Congress that could make it harder for homeowners to fight foreclosures in court.

White House press secretary Robert Gibbs said at his daily press briefing that Obama will not sign the "Interstate Recognition of Notarizations Act." 

The legislation would require federal and state courts to accept document notarizations from out of state. The measure would have included notarizations filed electronically, which critics say have been used to improperly rush home foreclosures through the courts.  


"Our concern is the unintended consequences on consumer protections," Gibbs said. "So the president is exercising a pocket veto to send that bill back to Congress to iron out some of those unintended consequences."

This is only the second pocket veto Obama has issued since entering office. Obama used a pocket veto earlier this year to kill a continuing resolution to fund the wars in Iraq and Afghanistan. He did so after Congress approved a full appropriations bill for the two wars. 

The Senate quietly passed the foreclosure bill in a voice vote before adjourning to campaign for the midterm elections. The House passed the measure in April.

Gibbs said Obama decided to put aside the legislation "out of an abundance of caution" and promised, "we will as an administration work with Congress to fix this."

Supporters of the legislation said the bill would expedite interstate commerce by reducing court challenges over the authenticity of documents.   

"This legislation will help businesses around the nation by eliminating the confusion which arises when states refuse to acknowledge the integrity of documents notarized out-of-state," Rep. Robert AderholtRobert Brown AderholtMo Brooks expresses interest in running for Shelby's Senate seat Shelby won't run for reelection Will Biden continue NASA's Artemis program to return to the moon? MORE (R-Ala.), the author of the bill, said in a statement last month.

The measure arrived on President Obama's desk amid heightened scrutiny of foreclosures at firms such as JPMorgan Chase, Bank of America and Allay Financial Inc., formerly known as GMAC. All three institutions have halted foreclosure proceedings over concerns about incomplete or inaccurate paperwork.  

The problem stems from issues with so-called "robo-signers," middle managers who sign affidavits allowing banks to repossess homes that are in default. Several of the managers have admitted in depositions that they signed off on thousands of foreclosures without fully reviewing the loan documents.

House Speaker Nancy Pelosi (D-Calif.) and 30 California House Democrats sent a letter to the Justice Department this week asking for an investigation of financial firms for "possible violations of the law" in carrying out foreclosures. 

Attorney General Eric HolderEric Himpton HolderSenate panel dukes it out over voting rights Progressive groups announce M voting rights effort Congress in lockdown: Will we just 'get used to it'? MORE on Wednesday said Justice's Financial Fraud Enforcement Task Force is "looking into" the foreclosure proceedings in a number of states for possible legal violations.

Officials in a number of states — Delaware, Texas, Maryland, Ohio, Connecticut, Florida, North Carolina, Iowa and Illinois — are also asking specific banks to halt foreclosures to investigate possible problems. 

The NAACP, Center for Responsible Lending, Leadership Conference on Civil Rights, National Council of La Raza and the National Fair Housing Alliance on Thursday called for a national moratorium on foreclosures.

Sen. Robert MenendezRobert (Bob) MenendezDemocrats gear up for major push to lower drug prices Biden under pressure to spell out Cuba policy Senators to Biden: 'We must confront the reality' on Iran nuclear program MORE (D-N.J.), chairman of the Senate Banking Subcommittee on Housing, Transportation and Community, this week wrote a letter to JPMorgan Chase, Bank of America and Allay Financial asking for more information about their foreclosure practices.

"To learn that some financial institutions have treated foreclosures as a rubber-stamp process is deeply troubling,” Menendez said in a statement. “I want to know how deep this problem goes and what safeguards are now in place to prevent unjustified rubber-stamp foreclosures from happening in the future."

Menendez and Sen. Al FrankenAlan (Al) Stuart Franken#MeWho? The hypocritical silence of Kamala Harris The Hill's Morning Report - Presented by Facebook - Senate Dems face unity test; Tanden nomination falls Gillibrand: Cuomo allegations 'completely unacceptable' MORE (D-Minn.) also sent a letter to the Government Accountability Office Tuesday asking for an investigation into any possible regulatory problems that might have allowed the flawed foreclosures to occur. The senators said the GAO should consider whether new regulatory powers are needed to prevent possible misconduct in the future.