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California Enacts Law to Protect Senior Homeowners from Foreclosure

Late last week, California Governor Edmund G. “Jerry” Brown Jr. signed into law a bill that protects widowed spouses and other heirs from foreclosures.

Through the legislation (SB 1150), when the sole borrower listed on a mortgage passes away, it entitles widows, widowers, domestic partners, heirs, siblings and other survivors to information and communication from the mortgage servicer.

The legislation also provides these surviving persons the right to seek a loan assumption and modification, if needed.

Already, the enactment of the bill has been met with applause from certain consumer advocacy groups, such as the Center for Responsible Lending (CRL).

“Heirs who legally inherit their home deserve accurate information about loan assumption or modification from their loan servicer,” said Graciela Aponte-Diaz, director of California Policy for CRL, in a press release. “This commonsense bill will help accomplish that and give families a fair shot to rebuild their financial future.”

Also known as “The Homeowner Survivor Bill of Rights,” SB 1150 was authored by California Senators Mark Leno (D) and Cathleen Galgiani (D) and introduced in the California State Legislature in February.

The bill closes a loophole in California law, the Senators argue, that fails to provide surviving family members protections against foreclosure that are currently available to other homeowners.

While the California Homeowners’ Bill of Rights—approved by the Legislature in 2012—provided foreclosure relief for California families, the legislation did not protect surviving family members who own their homes, but are not listed on the mortgage.

“These survivors report that servicers fail to provide factual information about loan details and foreclosure avoidance programs or refuse to communicate with them,” says a statement provided by the office of Sen. Leno. “As a result, many families have experienced unnecessary foreclosures.”

SB 1150 clarifies the responsibilities of a mortgage servicer when a borrower dies and one of the surviving homeowners wishes to assume the loan.

The legislation also ensures that heirs receive accurate information about loan assumption and foreclosure prevention programs, and gives survivors a single point of contact with the servicer and the ability to apply for loan assumption and modification.

“Facing foreclosure after the loss of a loved one can be devastating,” said Sen. Leno in a written statement. “The Governor’s approval of SB 1150 will help keep more families in their homes and reaffirms California as a nationwide leader in protecting vulnerable homeowners.”

Among consumer groups, the law is considered a victory for seniors, in particular, according to the California Reinvestment Coalition (CRC), which co-sponsored SB 1150.

“Today is a victory for seniors, for protecting the largest asset most of us will ever own, for stopping mortgage servicing abuses that were leading to needless foreclosures, and for stabilizing California communities,” said Kevin Stein, associate director of the CRC, in a written statement.

“We thank the nonprofit housing counselors, attorneys and other advocates who first brought these abuses to light, who helped homeowners to keep their homes and who supported SB 1150 throughout the legislative process,” Stein added.

Other sponsors of SB 1150 include the California Alliance for Retired Americans, Housing and Economic Rights Advocates, as well as support from Attorney General Kamala Harris, AARP and the California District Attorneys Association.

View SB 1150 here.

Written by Jason Oliva

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