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Survivor Bill of Rights’ is Gaining Traction

A “survivor bill of rights,” or bill that would protect families from foreclosure after the death of the primary mortgage noteholder, has gained traction in California and is likely to see a vote in the state Senate this week.

Senate Bill 1150, authored by Senators Mark Leno and Cathleen Galgiani, has already passed in the Senate Banking and Senate Judiciary Committees.

California led the nation in providing foreclosure relief in 2012 when it passed the Homeowner Bill of Rights, which offered certain protections to homeowners. That Bill of Rights did not include protections for surviving family members who are not listed on the mortgage following the death of the borrower.

“Instead of getting basic information on how to proceed with a home loan following the death of a loved one, surviving spouses and children face a labyrinth of paperwork and conflicting directions and requests, which only prolongs their grief,” Leno said. “Many family members unnecessarily lose their homes without ever knowing they had the right to assume the loan or seek foreclosure remedies. Before more families give up, we must step in.”

Under SB 1150, the responsibilities of a mortgage lender or servicer are clarified for situations in which the borrower dies and a surviving family homeowner not named on the mortgage wants to assume the loan. SB 1150 ensures that heirs are accurately educated regarding loan assumption and foreclosure preventions. The legislation also calls for a single point of contact (SPOC) to be established for the survivors to communicate with the lender, and it also gives survivors the ability to apply simultaneously for a loan modification and loan assumption.

California was one of the states hit hardest by the foreclosure crisis. Even six years after foreclosure activity in the country peaked, foreclosure levels remain elevated in the state due to the high population. According to CoreLogic, for the 12-month period ending March 31, 2016, there were 23,000 foreclosures completed in California, which ranked fourth among states behind only Florida, Michigan, and Texas. Even with the high number of completed foreclosures, California’s foreclosure inventory—percentage of residential mortgages in some state of foreclosure—was only 0.4 percent in March, which was close to one-third of the national average for the month of 1.1 percent.

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