Daily Archives: April 22, 2015

AB244 bill: California legislators want to require mortgage servicers to speak to widowed homeowners but Chamber of Commerce, bank industry oppose

Hat tip from CAReinvestCoalition!

As Capital & Main explained: “It happens every spring: The start of baseball season and the Chamber of Commerce’s assault on legislation designed to improve the lives of Californians – many of them our most vulnerable residents.”

This time, The California Chamber of Commerce put Assembly Bill 244 on their “Jobs Killer” list. AB 244 is a bill that would help even the playing field for grieving spouses who are trying to speak to their mortgage servicer about keeping their family home.

If a spouse, partner, or parent, passes away and they were the only person listed on the mortgage, then it can create huge headaches for the surviving family member, in what has been called the “widows and orphan problem.” Despite having a legal interest in the home (many are on the title to the home), they are hitting a brick wall when they try to speak with their mortgage servicers.

Walter Einenkel highlighted an example of this yesterday on Daily Kos (Bank of America tries to seize widow’s home while forgetting to mention that her loan was insured) with his story about a widowed homeowner facing foreclosure in California.

As Ms. Biggs experienced, the servicer may either refuse to speak to them, or make them jump through countless hoops before they’ll speak with them. Even if they can convince their mortgage servicer to speak with them, they often face additional obstacles and red tape in trying to keep their family home.

If the surviving spouse, partner, or child would like to assume the mortgage and also needs a modification (since their income just dropped in half), then they will face even more red tape. The servicer won’t grant them a modification until the survivor assumes the loan, but they won’t let them assume the loan until they’ve demonstrated they can afford it (which they can’t since their income just got cut in half).

This “catch 22” is pushing too many homeowners into foreclosure unnecessarily.

AB 244, co-sponsored by the California Reinvestment Coalition and Housing and Economic Rights Advocates, is intended to address this problem.  It would clarify that mortgage servicers can speak with a surviving heir. It would also clarify that these homeowners are also protected by the California Homeowner Bill of Rights.

Eighty-seven percent of California housing counselors believe that the “widows and orphans problem persists, and more needs to be done,” despite earlier guidance from federal regulators to servicers on this issue.

So, to review.  We have grieving homeowners on one side, trying to navigate an awful mortgage servicer bureaucracy and possibly facing foreclosure. We have about 30 nonprofit organizations that support fixing this problem through AB 244.  On the other side, we have the banking industry and the Chamber of Commerce, who are opposing any efforts to help these homeowners.

Read on.