WIDOWED HOMEOWNERS WILL BENEFIT, BUT SENATE BILL 1150 IS STILL NECESSARY TO ENSURE ACCOUNTABILITY
San Francisco, August 4, 2016 – – (RealEstateRama) — The Consumer Financial Protection Bureau released its finalmortgage servicing rule today, with stronger protections to prevent unnecessary foreclosures on successors-in-interest, more commonly known as “widow foreclosures.”
In response, Kevin Stein from the California Reinvestment Coalition (CRC) and Maeve Elise Brown from Housing and Economic Rights Advocates (HERA) issued these statements:
“We are glad to see the CFPB issue its much anticipated final rule on mortgage servicing, which clarifies the obligations that mortgage servicers have to work with successors in interest (widows, orphans and similar heirs). As expected, the rule acknowledges that these successors are confronting a variety of hurdles when trying to work with their mortgage servicer to keep their family home,” explains Stein. “To address this problem, the Bureau’s new rule provides confirmed successors the same rights as all borrowers which is positive. At the same time, it was concerning to see the Bureau chose not to include an accountability mechanism (like a private right of action) to ensure the servicers would follow the new rules. And, these new rules won’t take effect until early 2018.”
Brown adds: “Fortunately, pending state legislation, Senate Bill 1150 (Leno, Galgiani), includes a private right of action for California successors to ensure that mortgage servicers are held accountable for following the rules. We learned from the Homeowner Bill of Rights that including this mechanism created accountability and forced mortgage servicers and banks to clean up their acts and stop illegal foreclosures. Senate Bill 1150 would do the same thing for the most vulnerable homeowners in California.” She adds: “The CFPB’s new rules, coupled with SB1150, would go a long way towards leveling the playing field and helping to preserve the largest asset most Americans will ever own.”
Broad Support: SB 1150 is co-sponsored by Housing and Economic Rights Advocates (HERA), the California Reinvestment Coalition (CRC), and the California Association for Retired Americans (CARA). SB 1150 is supported by California Attorney General Kamala Harris and over 60 well-known organizations, including AARP California, California State Conference of the National Association for the Advancement of Colored People, Courage Campaign, CalPIRG, the Multicultural Real Estate Alliance for Urban Change, the National Council of La Raza, the National Housing Law Project, Neighborhood Housing Services of Los Angeles County, and more. To see a full list of supporters, visitwww.survivorbillofrights.org.
Research on Problems faced by successors in interest:
In 2012, the California Reinvestment Coalition and Housing and Economic Rights Advocates submitted an in-depth legal analysis of the problem and case studies of homeowners in California experiencing these problems to the CFPB, OCC, and Federal Reserve.
In a 2014 survey of housing counselors and Legal Aid attorneys, 87% of respondents said the “widows issue” was still a problem, despite federal guidance to mortgage servicers about working with successors in interest.
A 2016 white paper by Housing and Economic Rights Advocates gives additional context to this problem and the problems it can trigger for older Americans who want to age in place and whose home is their largest asset. Download the paper here: Whose Home Is It Anyway? How The Modern Mortgage Servicing Industry Strips Wealth From Low and Moderate Income Communities In the U.S. And California