Bill Creating Foreclosure Protections for Widows and Heirs Explained in New Video

pic 2 SB 1150

“Red tape foreclosures” are a problem that are continuing to plague surviving homeowners throughout California, according to housing counselors and attorneys.

New legislation introduced by Senator Leno and Senator Galgiani, The Homeowner Survivor Bill of Rights, Senate Bill 1150, would address this problem.

SB 1150 clarifies the responsibilities of a mortgage lender when a borrower dies and passes the home along to a survivor who wishes to assume the home loan. The legislation ensures that heirs receive accurate information about loan assumption and foreclosure prevention programs. It also gives survivors a single point of contact with the lender and the ability to simultaneously apply for loan assumption and modification. SB 1150 is sponsored by the California Alliance for Retired Americans, Housing and Economic Rights Advocates and California Reinvestment Coalition.

A new interview with Kevin Stein, associate director of the California Reinvestment Coalition, explains the problems surviving homeowners are facing and how SB 1150 would address it.

If you would like to learn more after watching the video, visit: www.survivorbillofrights.org

Supporters of SB 1150 include

  • California Association of Retired Americans (co-sponsor)
  • Housing and Economic Rights Advocates (co-sponsor)
  • California Reinvestment Coalition (co-sponsor)
  • Attorney General Kamala Harris
  • AARP California
  • AIDS Legal Referral Panel
  • Bay Area Legal Aid
  • California District Attorneys Association
  • California Nurses Association
  • California Professional Firefighters
  • California Rural Legal Assistance, Inc.
  • California Rural Legal Assistance Foundation
  • CALPIRG
  • Capital Impact Partners
  • Community Housing Developers, Inc
  • Community Legal Services of East Palo Alto
  • Consumer Federation of California
  • Courage Campaign
  • Fair Housing of Marin
  • Family Caregiver Alliance
  • Institute on Aging
  • Justice in Aging
  • Legal Services of Northern California
  • Los Angeles County Democractic Party
  • National Center for Lesbian Rights
  • National Housing Law Project
  • Nehemiah Corporation of America
  • Neighborhood Housing Services of LA County
  • Project Sentinel
  • Public Counsel
  • Public Law Center
  • Renaissance Entrepreneurship Center
  • Rural Community Assistance Corporation
  • SEIU California
  • The ARC and United Cerebral Palsy California Collaboration
  • United Domestic Workers of America, AFSCME Local 3930, AFL-CIO
  • Unite Here
  • Western Center on Law and Poverty

New CFPB Study on Reverse Mortgage Ads find Many Contain Confusing, Incomplete, and Inaccurate Statements

Fred Thompson vs. new CFPB study

Picture of former Senator Fred Thompson in reverse mortgage advertisement

“When it’s a former Congressman endorsing it, it makes it sound like a good idea.” -consumer discussing reverse mortgage advertisements and celebrity spokespeople.

Earlier today, the CFPB released a study that examined advertisements for reverse mortgages.

They found:

Among the advertisements we collected, on their face, many contained confusing, incomplete, and inaccurate statements regarding borrower requirements, government insurance, and borrower risks. Furthermore, after viewing ads in our focus groups, many consumers were confused or had misconceptions about important features and terms of reverse mortgage loans. For example, some consumers struggled to understand that reverse mortgages are loans that must be repaid with interest. Consumers also often misinterpreted the role of the federal government in the reverse mortgage market as providing consumer protections that are not actually offered.

If you’re a regular follower of CRC, you know that we’re opposing the CIT Group and OneWest merger, and one of the issues that has come to light is the reverse mortgage servicing subsidiary of OneWest bank, innocuously named “Financial Freedom.”

At a Federal Reserve hearing held in February 2015 in Los Angeles, dozens of people and organizations testified against the merger.  A number of the people who either spoke or submitted testimony cited their incredibly difficult times trying to work with Financial Freedom, especially after the death of a loved one.

The issue of surviving spouses facing foreclosure due to a reverse mortgage that was originated solely with their deceased spouse has come to light thanks to a class action lawsuit by AARP against HUD for turning a blind eye to reverse mortgage brokers and companies originating these loans to only one spouse, with the implicit suggest that the often younger, often female spouse, wouldn’t face foreclosure and/or could be added to the loan later.  Now, these widowed homeowners are facing foreclosure.

HUD released a policy in January 2015 to address this issue, but most experts predicted it would be useless for the very people it was supposed to help.  In April, HUD rescinded the policy, but what about the homeowners who are potentially facing foreclosure?

Take a look at the testimony by Karen Hunziker, who is a surviving spouse, facing foreclosure.  Does this sound like a helpful loan servicing department, especially if you’re a grieving spouse?

Additionally OWB has failed to provide a Single Point of Contact. This creates a communication maze impossible to navigate for the consumer to get customer support or guidance.

One day, I called 5 times to verify I received the 90 day extension OWB promised in writing. I spoke to 5 different people all with a different story. In part, I was told:

• OWB didn’t receive the documents faxed multiple times,
• The documents needed to be reviewed by their legal department,
• I had to call back in 5 days
• I used up all my extensions.
• I didn’t get the documents in on time,
• The last person told me my property was scheduled for auction in 30 days.

At all times OWB refused to put any phone conversation in writing.

For more background on this issue, read these two articles.

Will grandma get run over by HUD’s reverse mortgage policy?

New Reverse Mortgage Policy Leaves Widows and Widowers Homeless

If you’re an attorney working with a surviving spouse facing foreclosure due to a reverse mortgage, or if you’re a surviving spouse facing foreclosure, please contact CRC if you’d like to join in advocacy on this issue. We are NOT able to represent you as an attorney, but we would like to have you join in our advocacy to bring greater attention to this problem and how it is affecting widowed homeowners.

 

 

Lack of Single Point of Contact With Financial Freedom Reverse Mortgage (Owned by OneWest) Not Helpful for Heir

The testimony of Michael Allen, a surviving family member of a OneWest reverse mortgage borrower, about the proposed OneWest and CIT Group merger, is featured in its entirety below. If you were unable to attend the hearing, CRC live-blogged it here and you may also find our CIT Group/OneWest Merger resource page helpful as well. Pictures of the rally against the merger are available here.

TESTIMONY OF MICHAEL ALLEN

PUBLIC MEETING FEBRUARY 26, 2015, 8 AM to 4 PM

FEDERAL RESERVE BANK, LOS ANGELES BRANCH

Thank you for the opportunity to testify today.  My testimony is in opposition to the proposed merger of OneWest Bank and CIT Financial.

My name is Michael Allen.  I live in Phoenix, Arizona.  I am Successor Trustee for my mother, the borrower of a Financial Freedom reverse mortgage.

My mother’s intention for her estate was for her family to sell the home to repay the loan.  She died on June 12, 2014

At all times, I was in compliance with HUD regulations to the best of my ability based on the limited information provided by OneWest Bank.

OneWest Bank (OWB) did not provide a Single Point of Contact nor provide any guidance or instruction to help me satisfy the loan.

I initiated all calls to OWB and spoke to a different person with a different story and different reason to deny my requests.

OWB claimed they didn’t get my documents time after time.  THEY DID

OWB sent me a short sale packet twice after I wrote saying I wanted to pay the lesser amount of the loan balance.  The appraised value was about $35,000 more than the loan balance.

OWB refused to perform or pay for a HUD required appraisal.

I called OWB on October 1st to inform them a sale was in process.

On 11/3 I received notification that OWB had recorded a Notice of Trustee sale on September 29, approx 3 months after my mother’s death and 2 months after receipt of the repayment letter.

OWB used Arizona foreclosure laws to violate HUD regulations and my right to time to sell the property.

I called OWB  – they refused to postpone auction.

The auction was cancelled with HUD intervention.

OWB added foreclosure related legal fees and drive by appraisal fees to the payoff.

The only phone call I ever received from OWB was on December 19 to tell me they have no intention of removing the accelerated foreclosure fees.

My story is illustrative of OneWest Bank’s violation of my right to repay the loan, the acceleration of foreclosure, and the related legal and appraisal fees of $2,508.50 and an unidentified servicing advance of $1,839.00 we did not receive.

I should not have to pay for OneWest Bank’s violations of HUD regulations or my rights.

I request an Investigation, audit, and review of OWB Reverse Mortgage Loan Files

  • For the servicing violations of Federal Regulations and consumer rights
  • To ensure compliance with existing laws and regulations.

Thank You!

Documented evidence of my testimony can be provided upon request.

Bet Tzedek Testimony at OneWest CIT Group Merger Federal Reserve Hearing

The testimony of Rachel Mehlsak, attorney with Bet Tzedek, about the proposed OneWest and CIT Group merger is featured in its entirety below. If you were unable to attend the hearing, CRC live-blogged it here and you may also find our CIT Group/OneWest Merger resource page helpful as well. Pictures are available here.

CIT Group/OneWest

JOINT PUBLIC MEETING

Held by the Federal Reserve and the Office of the Comptroller of the Currency

February 26, 2015

Good morning.  My name is Rachel Mehlsak, and I’m an attorney at Bet Tzedek Legal Services in Los Angeles.  Bet Tzedek pursues equal justice for all by providing free legal services to low-income, disabled and elderly people of all racial and religious backgrounds. We use direct legal services, impact litigation, community outreach and legislative advocacy in the areas of consumer rights, employment rights, elder law, Holocaust reparations, housing, public benefits and real estate to serve more than 20,000 people every year.

Bet Tzedek is also the lead agency of the California Consumer Justice Coalition – a group of five legal aid agencies in Southern California funded by the California Attorney General with proceeds from the National Mortgage Settlement.  The Coalition provides legal services and housing counseling to individuals facing foreclosure and other consumer debt issues.

As part of my work in Bet Tzedek’s real estate unit and through the Coalition’s foreclosure prevention efforts, I’ve worked with many homeowners, mostly seniors, trying to save their homes from foreclosure.

My colleagues and I have seen firsthand the distress caused by OneWest Bank in its rush to pursue foreclosure, particularly against elderly clients with reverse mortgages serviced by its Financial Freedom division.  One elderly Bet Tzedek client was threatened with foreclosure by Financial Freedom for not making repairs to her home.  But the client’s original lender, IndyMac, had refused to release the funds that were set aside for the repairs, effectively preventing the client from making the repairs and then punishing her for not doing it.  Moreover, Financial Freedom had let the client’s affordable hazard insurance lapse, and then force-placed her with a OneWest-affiliated company at an exorbitantly higher rate.

Another client I worked with had lived in her home for over 40 years.  She is elderly, disabled, and supports her daughter and four minor grandchildren on just her monthly Social Security income.  After her husband died, she had trouble maintaining her property tax payments, and OneWest, the parent company of her reverse mortgage lender, Financial Freedom, threatened to foreclose.

Eventually, OneWest initiated foreclosure against the client’s home one month sooner than HUD guidelines required.  OneWest did so even though HUD had just announced a 60-day extension of its foreclosure timeframes for surviving spouses like my client and even though I had asked Financial Freedom multiple times to postpone the foreclosure proceedings.  I was able to help the client obtain a one-month extension of the foreclosure – an outcome she wouldn’t have received without representation – but ultimately OneWest went through with the foreclosure sale.  Three generations of my client’s family were kicked out of their home for less than $1300 owed to Financial Freedom.

Bet Tzedek’s name is a reflection of its mission – the pursuit of justice.  We think it would be particularly unjust to the clients and communities we serve to permit the CIT/OneWest merger to proceed without a much stronger, comprehensive, and public CRA commitment.  These banks are receiving tremendous financial support through public subsidies and guarantees.  It is only just that they make a substantial reinvestment commitment to the communities from whom they’ve already taken so much before they are allowed to grow even bigger and take even more.

Thank you.

New Resource for Widowed Homeowners Facing Foreclosure

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: familyhome@heraca.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)