The California State Senate approved legislation Wednesday to expand the rights of widows, widowers and other heirs facing foreclosure following the death of a loved one.
SB 1150, also known as the Homeowner Survivor Bill of Rights, aims to spell out what responsibilities mortgage servicers have in a situation where a borrower dies and the surviving homeowner is not on the loan. Much of the transparency procedures that would be implemented by the legislation were taken from the existing Homeowners Bill of Rights in California that went into effect in 2013.
The bill would prevent servicers from recording a default notice following notification of the death of a borrower until certain actions are taken. In particular, servicers would be required to provide a successor with information about the loan within 10 days of determining who the successor is.
Servicers would also have to allow the successor in interest to assume the loan following the borrower's death if eligible or to apply for foreclosure prevention alternatives. The law does not require lenders or servicers to offer loan modifications or to accept the assumption of loans by successors.
The bill, which was introduced in February, was written by California State Sens. Mark Leno and Cathleen Galgiani and sponsored by the California Alliance of Retired Americans, Housing and Economic Rights Advocates, and the California Reinvestment Coalition. It has also received backing from 50 organizations, including AARP California and the National Council of La Raza, and from California Attorney General Kamala Harris.
"Widowed spouses are being consumed by a labyrinth of processes in an attempt to assume or modify existing home loans after the primary mortgage holder passes away," Leno said in a news release. "This has led to preventable foreclosures and worsened the suffering of families already thrown in personal crises."
