Lending Servicing

California considering bill that would help widowed spouses keep their homes

Homeowner Survivor Bill of Rights would expand foreclosure protections

Past due foreclosure home

A new bill introduced in the California State Senate would establish a Homeowner Survivor Bill of Rights, which is designed to help widowed spouses and children stay in their homes after the primary mortgage holder passes away.

The bill closes a loophole in California law that fails to provide surviving spouses and children important protections against foreclosure that are available to other homeowners, the offices of California State Senators Mark Leno and Cathleen Galgiani said this week.

The bill would expand on the California Homeowners’ Bill of Rights, which was enacted in 2012, and provides a series of protections for homeowners against foreclosures.

According to Leno and Galgiani’s offices, the California Homeowners’ Bill of Rightsrequires a single point of contact at a lending institution and prohibits dual-track foreclosures, when lenders foreclose on a home while the owners are simultaneously seeking a loan modification.

“Unfortunately, servicers argue that surviving family members who are not named on the loan are not covered by HBOR,” Leno and Galgiani said in a statement.

“These survivors report that lenders refuse to communicate with them or fail to provide factual information about loan details and foreclosure avoidance programs,” they continued. “As a result, many families have endured unnecessary foreclosures.”

The new bill, Senate Bill 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 Senators said.

According to the Senators’ statement, the legislation, if passed, would ensure that heirs receive “accurate information” about loan assumption and foreclosure prevention programs.

The bill would also give survivors a single point of contact with the lender and the ability to simultaneously apply for loan assumption and modification.

“Grieving family members who have the financial ability to remain in their homes following a loved one’s death shouldn’t have to face the added stress of a lender’s red tape,” Leno said.

“Widowed spouses are being consumed by a labyrinth of processes in an attempt to assume or modify existing home loans after the primary mortgage holder passes away,” Leno continued. “This has led to preventable foreclosures and worsened the suffering of families already thrown in personal crises.”

The Senators said that the bill is sponsored by the California Alliance for Retired Americans, Housing and Economic Rights Advocates and California Reinvestment Coalition.

“There are more than 3 million senior homeowners in California, and as our aging population continues to grow, so does this problem,” said Hene Kelly, legislative director at the California Alliance for Retired Americans. “Older women are particularly harmed by the state’s lack of homeowner protections because they tend to live an average of seven years longer than men.”

The Homeowner Survivor Bill of Rights will be heard in Senate policy committees this spring, the Senators said.

“We can’t allow the status quo to continue,” said Kevin Stein, associate director at the California Reinvestment Coalition. “SB 1150 is a common-sense solution that would make a world of difference for families who are going through tough times.”

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