For years, consumers have been warned of what could happen in the event of the death of the primary financial mind in one’s family. Surviving family members often have no way of knowing what kind of financial obligations that are being left behind, including details on when the mortgage, insurance and credit card payments are due. In those difficult times, it can quickly become overwhelming. Now, though, there’s a new twist on this worry.
For those left behind and whose names are not on the mortgages, there are fears that they’re going to be foreclosed on and in some instances those fears have come full circle and are a reality. Until and unless they can get their names added to the mortgage, they are caught in a twisted cycle of taking care of business on accounts that only account holders can legally access. For those behind on their mortgage payments, many lenders won’t even consider helping them until those payments are brought current.
The average age of these people, who are mostly women, is 50. Often, they need to refinance those mortgages for more affordable payments, but it’s difficult to refinance something you technically don’t have a stake in. As a result, and with no legal leg to stand on, they’re finding themselves having to leave the homes their raised their families in. It’s a tragedy, really, and the refusal of some banks and lenders to ease that transition is non-existent. This is bad enough, but statistics now show the fastest growing number of foreclosures are occurring to those over the age of 50; in fact, there’s been a 23 percent increase between the years 2007 and 2011. That totals 1.5 million foreclosures. AARP says women often outlive their spouses and they are not prepared for what happens after the shock has worn off and they must face the family finances.
One advocates attorney said women in these circumstances have become invisible. that could the changing, though. There have been at least a few lenders that have changed their policies and now housing watchdog groups are teaming to petition the Consumer Financial Protection Bureau in hopes of changing the laws. Some banks says even though they have definitive guidelines in place for handling foreclosures they are willing to come to the table to discuss any changes in the laws and in the meantime, they say they will work with widows to find solutions that don’t include them being without their home. It’s a fast growing problem, though, and unless measures are put in place soon, this can quickly become a tragic reality for millions more.
Along with these mortgage considerations, there are other financial obligations that these widows are facing. Many report not even realizing there were credit cards while others say they have no idea where their deceased spouses left important insurance documents and other legal contracts. Elder care advocates, housing attorneys and borrowers alike cite things like longer life spans play a role in these dynamics.
The number of complaints are growing, too, especially in areas like New York, California, Florida and even Ohio.
If a spouse dies after having endured a long illness, it can wipe out a couple’s retirement or other savings accounts. This often means the bills become overdue, which introduces the unwillingness of too many banks to consider other alternatives that would prevent a foreclosure. There are no clear solutions. There are no definitive ways to break those cycles and get to the heart of the matter, which is avoiding foreclosure.
Rising Age Sector
According to statistics from 2011, 6 percent of mortgage loans held by folks over the age of 50 were delinquent, up from about 1 percent in 2007. This study, published by AARP, highlights the seriousness of the problems. Debra Whitman, who is AARP’s executive vice president says that older Americans have saved less and borrowed more than recent earlier generations. This, of course, adds to the problems. She also says debt for those over the age of 65 is growing faster than any other age group. The Federal Reserve confirms those numbers.
For now, those that are willing to bend the rules are doing so by allowing complete loan modifications and mortgage assumptions at the same time. CFPB is involved as well as it nears completion on new oversight and compliance regulations. It’s a big step in the right direction, but there’s more to be done.
In one instance, a man had passed away after meeting with his bank to modify his mortgage. He passed away before the first payment had even been made and this left his wife in an even bigger mess since his social security was no longer coming in that could have offset the payment obligations. The mortgage payment, sent in by the widow, was returned by the bank with the explanation that the payment could not be applied because her name was on the mortgage. The bank, HSBC, refuses to comment on this or any of its other similar cases.
Many complaints by these older women include a refusal to even take phone calls, being asked to provide the same documents over and over and incomplete paperwork. Interestingly enough, these are similar complaints that led to the nation’s big five banks having to shell out $26 million dollars in early 2012.
Reports that these grieving widows are becoming physically ill due to the fears associated with not being able to know whether they’ll have a home from day to day should give these banking giants pause. It comes down to a simple truth: the banks refuse to do much of anything to change their policies unless they’re forced to do so, even when their policies result in stress and other health issues.
For now, some advocates have been able to successfully go to bat, so to speak, for these women and have managed to prevent foreclosures in many instances.
Does your family have definitive guidelines on the financial considerations? Would you or your spouse know what to do and where to look for those important documents? Share your story with us.
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