New Rules Aim To Protect Widowed Homeowners From Foreclosure
by Andrew Khouri, Los Angeles Times
The regulations, announced Thursday, generally give surviving spouses who are not on a mortgage note the same protections borrowers have. Those include a ban on so-called dual tracking in which mortgage servicers negotiate with clients to modify a mortgage while simultaneously pursuing foreclosure.
The rules, which expand and clarify existing guidance from the agency, were long awaited by consumer groups that are pushing similar regulations in a pending California Senate bill.
Those advocates say survivors — who already owned their homes or inherit them after a death — face considerable resistance from servicers when they seek loan modifications after losing their spouse’s income.
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.
Advocates also say servicers give them inaccurate information or require unnecessary documents to prove ownership of the home when applying for a modification as a foreclosure proceeds.
The new rules, which take effect in about 18 months, seek to address those issues. In addition to banning the dual tracking of survivors, the rules stop servicers from mandating survivors first get current on payments before receiving a loan modification.
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