Saturday, August 13, 2016

Protecting Widows and Widowers from Foreclosure

What happens is your spouse passes away unexpectedly and your name is not on your home loan? Generally speaking, if you are not having financial difficulties, you may be able to simply continue making monthly mortgage payments without any hassle. However, how will a mortgage servicer look at a widow or widower who is not on the original note but needs help with a mortgage modification? These situations can get complicated, and they can easily result in the surviving spouse having to contend with the possibility of foreclosure. According to a recent article in the Los Angeles Times, the Consumer Financial Protection Bureau (CFPB) has issued new rules that aim to prevent widowed homeowners from going into foreclosure.
Complications and Difficulties for Widowed Homeowners
Widowed homeowners tend to have a lot of trouble obtaining mortgage modifications. What is the issue? Often, survivors, including those who previously owned their homes through marriage or inherited them through the death of a spouse, run into difficulty with servicers. Even though they have a legitimate claim to the house following the death of a spouse, their names might not be listed on the original mortgage note. As such, when they have get behind on mortgage payments—often due to the death of the spouse—they cannot deal with the mortgage servicer in the same manner that the spouse who is the person listed on the loan.
As the article explains, “often companies won’t allow a modification until the surviving spouse assumes the loan, which can’t happen until the owner is current on the mortgage—something of a Catch-22.” Additionally, surviving spouses have complained that mortgage servicers do not provide accurate or up-to-date information about the documentation they need to provide in order to be listed on the mortgage in order to be eligible for a modification.
Given these facts, it can be extremely difficult for a surviving spouse to avoid foreclosure when they cannot afford mortgage payments. What is the CFPB doing to help?
New CFPB Rules to Protect Surviving Spouses from Foreclosure
Recognizing that many surviving spouses are at risk of foreclosure in the weeks and months following the death of the other spouse, the CFPB has announced new rules to protect those widowed spouses. Earlier this month, the CFPB said that its regulations will “generally give surviving spouses who are not on a mortgage note the same protections borrowers have.” The regulations will also protect against dual-tracking, which is a process “in which mortgage servicers negotiate with clients to modify a mortgage while simultaneously pursuing foreclosure.”
When will surviving spouses begin receiving these protections? The article highlights that the new rules are scheduled to take effect about a year and a half from now. But just because surviving spouses will have these protections does not mean that they will be able to obtain a mortgage modification regardless of other factors. To be sure, widowed spouses still will need to provide evidence in support of a modification, and the servicer will not be required to provide it.
Contact an Oak Park Foreclosure Defense Lawyer
If you have questions about avoiding foreclosure, an Oak Park foreclosure defense lawyer can help. Contact the Emerson Law Firm today to learn more about how we can help with your situation.
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  2. I'm a little confused. Are the new laws actual laws protecting widows from losing their home in foreclosure or are they simply guidelines that the lenders are encouraged to follow? I know quite a few people who were able to get mortgage help through the Making home affordable plan. I think that government mortgage assistance program has been so successful because of the lender incentives. I'm not sure if I remember correctly but I think Obama gives the lender $1,000 for every loan modification. which when you consider how many there have been (millions) that's a lot of cash!