The California State Senate is set to introduce a new bill that would give a series of protections for widows, widowers and their children against foreclosure after the primary mortgage holder in their family passes away. This would expand the protections included in the California Homeowners' Bill of Rights of 2012.
According to HousingWire, the new bill is called a Homeowner Survivor Bill of Rights being pushed through by the offices of California State Senators Mark Leno and Cathleen Galgiani. Since the HBOR does not cover family members whose names do not appear on the loan, many families have suffered from foreclosures that are otherwise unnecessary.
"These survivors report that lenders refuse to communicate with them or fail to provide factual information about loan details and foreclosure avoidance programs," Leno and Galgiani said.
This loophole is what the Senate Bill 1150 wants to patch up. The bill will clarify the mortgage lender's responsibilities in the event that the primary borrower dies. When passed as a law, it will ensure that families are provided with accurate information about the transfer of the loan and foreclosure prevention programs.
A report from San Jose Mercury News noted that of the surveyed counselors, 80 percent revealed they had clients with problems that the new bill would solve. On the contrary, California Mortgage Bankers Association spokesperson, Dustin Hobbs, has warned that the Leno and Galgiani's new bill poses a major risk to lenders because they would be writing a new loan to a new borrower instead of modifying the original one.
Associate Director of the California Reinvestment Coalition Kevin Stein rebut this by saying that the bill is not an assurance that the surviving family members are granted a new loan or loan modification. Instead, "It guarantees a fair process," Stein said. "We have an uneven playing field."