When purchasing a home with a spouse, planning for tragedy isn’t typically at the top of the to-do list. A recent proposed bill in California would help widowed homeowners who have a legal interest in a home but are not officially named on the mortgage avoid foreclosure, but there are some roadblocks facing the passing of the legislation, Assembly Bill 244, introduced by Susan Talamantes Eggman.
Proponents of the legislation are urging members of the California Chamber of Commerce to reconsider their stance on AB 244. Earlier this year, the Chamber listed AB 244 on its “jobs killer” list in what is thought to be a scare tactic toward legislators voting for the bill.
“This is about widows and orphans,” said Kevin Stein, associate director of the California Reinvestment Coalition. “It’s hard for us to understand why the opposition would be so strong and why, in particular, the Chamber of Commerce would go out of its way to say this is a jobs-killer bill. So we’re kind of perplexed, outraged, upset — and meanwhile, a lot of people are losing their homes because this problem has not been solved.”
AB 244 is a clarification that could help grieving widows avoid unnecessary foreclosure. Widowed homeowners who have a legal interest in a property but are not officially signed onto the mortgage would be protected by the California Homeowner Bill of Rights against improper foreclosures.
“We’re seeking to amend the existing protections from Homeowner Bill of Rights to this category of homeowner, who no one at the time thought would be excluded,” Stein said. “So from our standpoint, it’s just kind of a fix to fill a gap that nobody saw, but they’re likely concern is that the remedy for the violation of the Homeowner Bill of Rights is a litigation risk.”
At the center of the controversy is OneWest Bank and its subsidiary Financial Freedom, which is a reverse mortgage servicer. Reverse mortgage services are already a hot topic among financial experts, and the U.S. Department of Housing and Urban Development announced a policy in January for reverse mortgage servicers working with surviving spouses. However, that policy was rescinded.
Joseph Otting, chair of the Chamber of Commerce, is also the head of OneWest Bank. After trying to merge with another bank, CIT Group, and meeting an opposition of 21,000 people and more than 100 state and national organizations, dozens of family members testified against OneWest, citing various issues and roadblocks they met while working with the company. Some family members cited a lack of a single point of contact, lost paperwork and mixed messages from Financial Freedom.
California Reinvestment Coalition is co-sponsor of AB 244 with Housing and Economic Rights Activists, another statewide nonprofit organization, aiming to create equal rights for widowers and orphans.
Currently, there are specific protections in the Homeowner Bill of Rights for some instances and individuals. And while guaranteeing no particular outcome for homeowners, it is slated to provide a fair playing ground for all. Proponents of AB 244 are eager to extend those rights to orphaned children and widowed spouses.
“This is ensuring that surviving spouses of deceased borrowers have the same rights as other homeowners and borrowers in California, it’s not additional protections. Right now they have fewer protections,” Stein said. “The protections themselves are very reasonable. They are entitled to fair consideration before foreclosure. There are no special rights.”
According to Stein, this is not just a California issue. In speaking with other organizations throughout the country, he found there is a nationwide concern.
