California Gov. Jerry Brown on Thursday signed a bill that’s designed to give widows and widowers a better shot at saving their homes when they fall behind on mortgage payments.
Senate Bill 1150 boosts protections against foreclosure for surviving spouses who own their home but are not on its mortgage note.
Consumer groups say survivors — including those who inherit property after a death — face considerable resistance from loan servicers when trying to obtain modifications.
Servicers will generally accept a surviving spouse’s loan payments, but red tape involved in proving ownership can stall a modification while foreclosures proceed, according to advocates.
“Facing foreclosure after the loss of a loved one can be devastating. 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,” said Sen. Mark Leno (D-San Francisco), who authored the bill with Sen. Cathleen Galgiani (D-Stockton).
Widows and widowers will now have many of the rights borrowers already have under the California Homeowner Bill of Rights. Among those is a ban on dual tracking — the practice of negotiating with clients to modify a mortgage while simultaneously pursuing foreclosure.
The Consumer Financial Protection Bureau recently imposed similar federal rules on servicers nationwide, leading the banking industry to call the California bill unnecessary.
Consumer groups, however, noted that the federal rules won’t take effect for more than a year and they argued that the national regulations are more difficult to enforce. Advocates say the state bill includes a more expansive right to sue to stop a foreclosure or for economic damages if one proceeds.
Industry groups, including the California Bankers Assn., expressed concerns that those rights will expose their members to frivolous lawsuits.
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