2016 Update: New legislation introduced by Mark Leno and Cathleen Galgiani provides critical protections for widowed spouses and other survivors who assume home ownership responsibilities when the primary mortgage holder passes away. The Homeowner Survivor Bill of Rights, (Senate Bill 1150) closes a loophole in California law that fails to provide surviving spouses and children important protections against foreclosure that are available to other homeowners.
Visit www.survivorbillofrights.org to learn more about this important new bill.
Last week, the California Reinvestment Coalition released our 10th Survey of housing counselors and legal aid lawyers to measure how well banks and mortgage servicers are helping homeowners who request assistance in avoiding foreclosure.
As part of the survey, 11 homeowner stories and declarations were also included in the report from homeowners who had worked with attorneys at Housing and Economic Rights Advocates. Even working with attorneys, homeowners still faced unreasonable delays, requests for the same paperwork on multiple occasions, incorrect loan modification denials, wrong information about investors, and more.
While there were a number of troubling trends in the report, 87% of respondents said they felt that the “widows and orphans” problem still exists, despite federal guidelines released by various agencies in 2013. The “widows and orphans” problem refers to the fact that many widows, orphans, and others who inherit or have an ownership interest in property have faced foreclosure upon the death of a loved one because they were not listed on the loan, and the servicer would not work with them so that they could keep the family home.
While the CFPB, Fannie Mae, Freddie Mac, and Treasury Department released updated guidelines in 2013, (see the full report for citations) housing counselors report that mortgage servicing staff aren’t always aware of the rules.
To shed further light on this issues, Housing and Economic Rights Advocates (HERA) has created an email address. For widowed homeowners, or other heirs in similar situations, they can contact HERA via email at: firstname.lastname@example.org. HERA staff will make contact with each person that submits a story to that email address.
July 8, 2014 update: The CFPB issued additional guidance today to banks and mortgage servicers about working with widows and other heirs who are trying to keep their family homes. You can read it here: CFPB Clarifies Mortgage Lending Rules to Assist Surviving Family Members
A few media stories illustrate the very human impact of bank and mortgage servicer red tape on surviving family members:
1) Bank might foreclose on home because late husband isn’t residing there
“WASHINGTON — Billions of dollars in foreclosure settlements between big banks and government regulators haven’t helped Laura Biggs. The California woman is scheduled to lose her home nine days before Christmas because her mortgage company concluded that the house is no longer the primary residence of her husband, who’s been dead since 2003.” Read complete story here: “Bank might foreclose on home because late husband isn’t residing there” (Kevin Hall, McClatchy Washington Bureau, December 9, 2013).
2) Mortgage Catch Pushes Widows Into Foreclosure
“Ms. Bates, 70, is caught in a foreclosure trap that is ensnaring widows across America: she cannot get help lowering her payments until her name is added to the mortgage note, but the lender says she must be current on payments before that can happen.” Read complete story here: Mortgage Catch Pushes Widows Into Foreclosure (Jessica Silver-Greenberg, New York Times, 12/1/2012)
3) Call Kurtis Investigates: Surviving Family Members Losing Homes Left By Loved Ones
“ELK GROVE (CBS13) —The mortgage was in her late husband George’s name. The decorated war veteran died in 2007. Daughter, April, says she sent Green Tree his death certificate and the grant deed with her mother’s name on it, but says Green Tree will not work with them.” Read complete story here: Call Kurtis Investigates: Surviving Family Members Losing Homes Left By Loved Ones (CBS Sacramento, 11/1/2013)