For many months those of us who have been paying attention to financial and economic reports have heard that the economy is growing, albeit too slow for our tastes. That’s great news on a macro level but, on an individual level, it’s all too common to still hear stories about people who are falling through the economic recovery’s cracks. The housing market has seen its best numbers in several years and banks have enjoyed 6-year high record profits, but the system itself has yet to be fixed. There are still far too many loopholes and hoops that average citizens must jump through in order to stay whole in the system.
According to the American Association of Retired Persons (AARP), foreclosure rates have surged for older Americans. People over the age of 50 are falling into foreclosure faster than any other group, but women are paying a heavier price. Whether it’s caused by single-parent household status or partners having been laid off during the economic recession isn’t the issue; whatever the reason, the burden often falls on women to cover household expenses and mortgage payments, and women are finding that they’re not protected, especially at a time when financial and legal protection is most needed.
As it turns out, there is a ‘widows scenario’.
Once mortgage payments fall into arrears, typically the consumer will attempt to renegotiate the terms with the lending institution.
Enter Wells Fargo…
Unlike other large financial institutions — such as JP Morgan Chase which already permits surviving family members to assume a deceased person’s mortgage and apply for a modification at the same time — Wells Fargo does not have such provisions that allow for certain loan modifications. And women, who find themselves in the position of having lost a loved one now must also contend with the issue of losing their home.
How does this happen? The widow’s husband passes away and she falls behind on mortgage payments. Without adequate income to cover mortgage payments renegotiation of loan terms becomes necessary but as is generally the case with Wells Fargo (except for few one-on-one cases) the bank won’t renegotiate. The bank claims that the widow’s name is not on the mortgage note along with the deceased husband’s, the terms of the note stand. The note can’t be amended to add the widow’s name. Banks will allow surviving relatives to take over a mortgage after the original and named borrower’s death, but the mortgage must be current before it can be tranferred — and without the income of the deceased to keep payments current, it becomes a ‘catch-22’ situation. It’s a matter of bureaucracy: because their names are not attached to their mortgages, it can mean losing their home. And the result is that Wells Fargo is trapping elderly widows in a situation that results in the bank taking possession of their homes.
These are the types of issues that the Consumer Financial Protection Board should and must address. The economy cannot fully recover if the housing market remains in jeopardy. With women as home owners making up a sizable portion of the housing market it is more critical than ever that women – and all consumers – are clear about the lending practices of their financial institutions. The politics of financial and banking reform should not be allowed to get in the way; financial security for individuals means a stronger economy for the nation.