Managing Grief and a Looming Foreclosure

When a loved one passes, the burden of finalizing affairs often falls to the people closest to the deceased. Legal Aid of the Bluegrass helped a woman living in Scott County regain stability and move forward after the death of her husband but only after a series of mishaps.

One of many obstacles to overcome after her husband’s death was how Mary could stay in her home of over 23 years. She could no longer afford her mortgage payments and was on the brink of foreclosure when Legal Aid’s housing counselor stepped in. The Counselor worked with Mary to apply for a loan modification so the payments would be more affordable. But the loan had been sold and Mary was in default with the new servicer. Since her husband was listed as the sole borrower on the loan, the new lender was not working with Mary to modify the payments or even to recognize that she was now the owner. Finally, the Kentucky Attorney General got involved and worked with the lender to help Mary get the loan modified, and she began making payments that were more affordable for her.

After only one payment, however, Mary’s loan was sold to yet another lender that claimed that Mary had not made a payment in over a year. Again, the mortgage company was hesitant to work with Mary on modifiying the loan and the saga continued with yet another sale to yet another lender. But we persevered with Mary through it all, and after several years of work, Mary’s loan was permanently modified so her payments are affordable and she is able to keep the family home. Now she has a full house as she recently was granted custody of her minor grandchildren.

This year, a new rule came into effect that will alleviate the predicaments for people like Mary in the future. In April 2018, a new Consumer Financial Protection Bureau mortgage servicing rule brings additional protections to surviving spouses and heirs. Among other things, the rule disables a lender from foreclosing on a property because the person is not specifically on the note and ensures that a lender must work with the the current successor to help them keep the property. Far too often a borrower’s death leads to an endless cycle of default and inevitable foreclosure. The new rules should make these scenarios far less likely, and help keep families stable long after a loved one dies.