Consumer advocates and state officials had argued the legislation would make it difficult for homeowners to challenge foreclosure documents prepared in other states.
The White House is sending the bill back to Congress for revisions.
Press Secretary Robert Gibbs told reporters Thursday that officials around the country had expressed concerns about "unintended consequences" from the legislation. He said the administration would work with Congress to fix it.
In a blog post today, White House communications director Dan Pfeiffer wrote, "Notarizations are important for a large range of documents, including financial documents. As the President has made clear, consumer financial protections are incredibly important, and he has made this one of his top priorities, including signing into law the strongest consumer protections in history in the Wall Street Reform and Consumer Protection Act."
Pfeiffer continued, "That is why we need to think through the intended and unintended consequences of this bill on consumer protections, especially in light of the recent developments with mortgage processors."