California’s Homeowner Bill of Rights went into effect in 2013 and stopped mortgage servicers from engaging in abusive practices that were leading to unnecessary foreclosures on families throughout California.

However, some homeowners, mostly senior, recently widowed women, are finding that banks and servicers refuse to extend the consumer protections included in HBOR to them.  Instead, these homeowners are getting caught in a bureaucratic trap.

“Surviving homeowners” are homeowners or other heirs who are not listed on a mortgage, but who have an ownership interest in a home. In the most common scenario, a husband was the only person listed on the mortgage. After he passes away, his widow tries to contact their mortgage company to find out information about their monthly payment and if she can remain in the house by assuming the loan.  She may also inquire about the possibility of modifying the loan if the household income was just cut in half with the loss of her spouse.

Instead of getting help, many survivors are facing bureaucratic runarounds, mixed messages, and long delays. In one particularly egregious case near Los Angeles, the servicer “forgot” to tell a widow that her deceased husband had purchased insurance to pay off the home if he passed away.

Absent a careful review by a paralegal who caught the bank’s error, and media attention from McClatchy, the servicer had planned to foreclose on her ten days before Christmas.

Attorneys at Housing and Economic Rights Advocates, a nonprofit law firm, have worked with over 50 of these surviving homeowners from across the state in the past several years.  After hearing from advocates like HERA, federal regulators provided guidance to servicers on how to help these surviving homeowners.

But according to California housing counselors and attorneys who have completed multiple surveys, mortgage servicers aren’t aware of the guidance or don’t see the need to follow it. As a result, a widow, widower, or heir without an attorney will face an uphill battle in attempting to keep their home.

Stories from surviving homeowners would make the worst bureaucrat blush. Some have been instructed to have their deceased loved one sign a Power of Attorney before the servicer will talk to them. Others have wasted months and even years being referred between multiple departments and receiving conflicting information. Meanwhile, the foreclosure process moves forward, creating more stress during an already difficult time.

SB 1150, the Homeowner Survivor Bill of Rights, co-authored by Sens. Mark Leno, D-Calif., and Cathleen Galgiani, D-Calif., would put a stop to these servicer abuses. After a servicer is contacted by a surviving homeowner or other successor in interest, they would need to take reasonable steps to speak with that person before moving forward on the foreclosure process.

These reasonable steps include providing a single point of contact, informing the surviving homeowner of their options for assuming the loan, and, if necessary, options for modifying the loan.

The banking industry is opposing SB 1150, in part because it includes a private right of action. This ability for homeowners to sue for violations was also included in the Homeowner Bill of Rights, a bill the industry also opposed, predicting economic ruin if it passed.

Instead, HBOR serves as an incentive for servicers to clean up their practices, to train their front-line staff, and to stop engaging in some of the worst abuses, or to face legal action.

The common-sense protections included in SB 1150 are supported by Attorney General Kamala Harris, and over 50 well-known California nonprofits such as AARP California, the Courage Campaign, and Consumers Union. 

Senate Bill 1150 is expected to be voted on next Monday by the California Assembly Committee on Banking and Finance.  With California’s senior population growing by 1,000 people every day, SB 1150 is an opportunity for California to lead the nation again in protecting these senior homeowners.