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Letter to Director Cordray, Secretary Donovan, Acting Director DeMarco, Chairman Gruenberg, Comptroller Curry, Chairman Bernanke, Secretary Lew, and Secretary Shinseki - Spouse Foreclosure Protection

Letter

By:
Date:
Location: Washington, DC

Today, Ranking Member Maxine Waters (D-Calif.), joined U.S. Senator Richard Blumenthal (D-Conn.) and Lois Capps (D-Calif.), in sending a letter to eight executive agencies urging them to protect surviving spouses from foreclosure. This segment of the homeowner population -- often women in their later years -- faces unique circumstances that unfairly deprive them of opportunities to avoid losing their home.:

"Surviving spouses throughout the country have found themselves in this troubling situation, including in our states," Waters, Blumenthal, and Capps wrote. "These individuals, who also may be struggling with responsibility for medical bills, funeral costs, and other expenses while adjusting to a loss of income, are trapped without a means of preventing the loss of their homes."

There are various unique circumstances that can cause surviving spouses to lose their homes to foreclosure. For example, surviving spouses whose names do not appear on the mortgage loan for their home must assume the loan in order to remain in the home. However, banks usually require payments to be up-to-date in order for a survivor to assume the loan. If the survivor cannot afford the required payments, banks will often refuse to negotiate loan modifications with them, treating them like strangers instead of partners to the deceased. In the letter, Waters, Blumenthal, and Capps provided examples from their respective states.

"One Connecticut woman was part way through the foreclosure mediation process when her husband died, " Waters, Blumenthal, and Capps wrote. "Her husband was the only borrower on the loan, and after his death, the bank moved to terminate the mediation process because she was technically no longer eligible for mediation. She is now attempting to assume the loan, but there is no guarantee that she will be able to do so."

Waters, Blumenthal, and Capps sent the letter to the following executive agencies: Consumer Financial Protection Bureau, U.S. Department of Housing and Urban Development, Federal Housing Finance Agency, Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency, Federal Reserve, U.S. Department of the Treasury, and the U.S. Department of Veterans Affairs. All of these agencies deal with various aspects of the foreclosure process.

"We urge each of your agencies to use all powers at your disposal to ensure that financial institutions provide surviving spouses with full information about a loan, as well as help them to assume mortgages if they seek to, avoid foreclosure, and stay in their homes," Waters, Blumenthal, and Capps wrote. "In addition, as your agencies implement legal settlements with homeowners who were wrongfully foreclosed upon, we ask that you examine the eligibility of surviving spouses for the legal redress to which their late partners may have been entitled. We request that you provide us with a written response describing any efforts that your agency has already made to address this issue and specifying the actions that you will be taking to provide relief to surviving spouses."

Text of the letter is below:

Dear Director Cordray, Secretary Donovan, Acting Director DeMarco, Chairman Gruenberg, Comptroller Curry, Chairman Bernanke, Secretary Lew, and Secretary Shinseki:

As you are aware, homeowners over the age of fifty are currently entering foreclosure at a faster rate than any other age group in the country. We are writing regarding one segment of this population: individuals facing foreclosure after the death of a spouse. These surviving spouses, often women in their later years, can face unique circumstances that unfairly deprive them of opportunities to avoid foreclosure.

For example, surviving spouses whose names do not appear on their home's mortgage loan must assume the loan in order to remain in the home. However, banks usually require payments to be up-to-date in order for a survivor to assume the loan. If the survivor cannot afford the required payments, banks will often refuse to negotiate loan modifications with them, treating them like strangers instead of partners to the deceased. As a result, survivors unable to make payments are left without options that would enable them to avoid foreclosure. These individuals, who also may be struggling with responsibility for medical bills, funeral costs, and other expenses while adjusting to a loss of income, are trapped without a means of preventing the loss of their homes.

Surviving spouses throughout the country have found themselves in this troubling situation, including in our states. One Connecticut woman was part way through the foreclosure mediation process when her husband died. Her husband was the only borrower on the loan, and after his death, the bank moved to terminate the mediation process because she was technically no longer eligible for mediation. She is now attempting to assume the loan, but there is no guarantee that she will be able to do so.

Another woman in California, in the wake of her husband's death, missed a single payment on a mortgage that had only been in his name. After complying with the loan servicer's six-month payment plan, the regular monthly payment increased by $1,500.00 a month and the woman attempted to initiate a loan modification. So far the widow has not been able to obtain a loan modification or remove her deceased husband's name from the mortgage.

We are pleased that the Consumer Financial Protection Bureau specified in its mortgage servicing rules that servicers should facilitate communication with the successor of a deceased borrower. However, this is only a first step. We urge each of your agencies to use all powers at your disposal to ensure that financial institutions provide surviving spouses with full information about a loan, as well as help them to assume mortgages if they seek to, avoid foreclosure, and stay in their homes. In addition, as your agencies implement legal settlements with homeowners who were wrongfully foreclosed upon, we ask that you examine the eligibility of surviving spouses for the legal redress to which their late partners may have been entitled.

We request that you provide us with a written response describing any efforts that your agency has already made to address this issue and specifying the actions that you will be taking to provide relief to surviving spouses. We would be interested to learn if the current legal framework is sufficient, or if legislative changes would be necessary or helpful in assisting these individuals. We look forward to your prompt response.

Sincerely,

Richard Blumenthal
United States Senate

Maxine Waters
Member of Congress

Lois Capps
Member of Congress


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