SUBTRACTING INSULT FROM INJURY: HOW YOU CAN USE CALIFORNIA’S "SURVIVOR BILL OF RIGHTS" TO PROTECT THE HOMES OF GRIEVING HEIRS

By Lisa Sitkin, Esq.^*

INTRODUCTION

When a California homeowner falls behind on mortgage payments, both state and federal law require the loan servicer¹to communicate with the homeowner about the delinquent loan and, in most cases, provide an opportunity to apply for a loan modification or other foreclosure avoidance option before proceeding with a foreclosure. Until recently, however, there was no privately-enforceable state or federal law that explicitly required a loan servicer to engage in any kind of pre-foreclosure "loss-mitigation" process when the homeowner was a successor to the original borrower named on the home loan. As a result, surviving spouses, children and other heirs throughout California have lost their family homes in foreclosure while still grieving over a loved one’s death.

With the passage of SB 1150, the "Survivor Bill of Rights" (SBOR),² California now provides successors with rights similar to those enjoyed by original borrowers under the state’s Homeowner Bill of Rights (HBOR). In this article, the author provides an overview of the major provisions of the new law and offers practice tips for attorneys representing successors-in-interest facing foreclosure. Section I provides background history to contextualize the problem. Section II reviews the major provisions of the law, including important limitations on its application.³ Section III provides practice tips for attorneys representing successors-in-interest who may be at risk of foreclosure.