The Senate Banking Committee Wednesday passed legislation that helps prevent unnecessary foreclosures when a primary mortgage holder passes away. Senate Bill 1150, authored by Senators Mark Leno and Cathleen Galgiani, closes a loophole in California law that fails to provide surviving spouses and children important protections against foreclosure that are available to other homeowners.
“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,” said Senator Leno. “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.”
In 2012, California led the nation in providing foreclosure relief for homeowners by passing the Homeowners’ Bill of Rights. However, this legislation did not protect surviving family members who own their homes but are not listed on the mortgage. These survivors report that lenders refuse to communicate with them or fail to provide factual information about loan details and foreclosure avoidance programs. As a result, many families have endured unnecessary foreclosures.
SB 1150 clarifies the responsibilities of a mortgage lender when a borrower dies and one of the surviving homeowners wishes to assume the loan. The legislation ensures that heirs receive accurate information about loan assumption and foreclosure prevention programs. It also gives survivors a single point of contact with the lender and the ability to simultaneously apply for loan assumption and modification.
SB 1150 is sponsored by the California Alliance for Retired Americans, Housing and Economic Rights Advocates and California Reinvestment Coalition. The bill is also supported by Attorney General Kamala Harris, AARP and the California District Attorneys Association, as well as a long list of civil rights, housing and labor organizations. The bill will be heard next in the Senate Judiciary Committee.