Last Tuesday, the California Senate voted Senate Bill 1150, the Homeowner Survivor Bill of Rights (Los Angeles Times: Bill aimed at helping widows avoid foreclosure passes state Senate) forward. This means that widows, widowers, and other heirs are one step closer to avoiding what’s been called the “bureaucratic black hole,” when their loved ones pass away and they were the only ones listed on a mortgage.
Housing counselors, attorneys, and consumer advocates have been trying to address this problem for several years now, but banks and mortgage servicers have refused to follow new guidance from regulators on this issue.
In the most common scenario, a husband passes away, and his name was the only one on the mortgage. When she contacts her mortgage servicer, she will likely face a mind-numbing bureaucracy of incorrect information, being passed back and forth between different departments, and delays lasting months or even years. Incredibly, in a number of cases, surviving homeowners have been told they can’t talk to the bank until their deceased loved one signs a form authorizing them to do so.
Meanwhile, the foreclosure process is moving forward. Surviving heirs, numb from the loss of their loved ones, are also faced with the prospect of losing the home over their heads.
These survivor have an ownership interest in their home, yet the banks and servicers are engaging in the same practices that caused the California legislature (with strong support from Attorney General Kamala Harris) to pass the Homeowner Bill of Rights.
The next step for the bill is the Assembly Banking Committee. We anticipate that the bank lobbyists will be working hard to maintain the status quo, so if you’re interested in helping to disrupt that status quo, please contact us.