A divorce or the death of a family member can create a bureaucratic nightmare for the ex-spouse or the surviving spouse and children who have to carry on the financial business of the deceased person.  A new rule by the Consumer Financial Protection Bureau seeks to help those folk avoid foreclosures after the death of the mortgage borrower.
The Consumer Financial Protection Bureau is an agency of the United States government responsible for consumer protection in the financial sector. It was created in 2010 as part of the Dodd–Frank Wall Street Reform and Consumer Protection Act.  That Act was a legislative response to the financial crisis of 2007–08 and the subsequent Great Recession. CFPB jurisdiction includes banks, credit unions, securities firms, payday lenders, mortgage-servicing operations, foreclosure relief services, debt collectors and other financial companies operating in the United States.
In August 2016, the Consumer Financial Protection Bureau amended its mortgage servicing rules. Some of those amendments, including the ones relating to successors in interest, became effective April 19, 2018.
“Successors in interest” include surviving family members and certain other parties who receive an ownership interest in the home when the borrower dies or as a result of divorce.  Consumers and advocates complained that some successors in interest were unable to receive loan information from mortgage servicers after the death of the borrower or after a divorce.  As a result, successors in interest were sometimes unable to protect the home from foreclosure.  The new rules attempt to remedy this problem.
The following is a brief description of the protections for successors in interest that went into effect in April:

• Provide Confirmed Successors in Interest Foreclosure Protections. The 2016  Mortgage Servicing Rule generally requires servicers, upon confirmation of the successor in interest’s identity and ownership interest in the property, to extend the same foreclosure protections to the confirmed successor in interest that are afforded to the original borrower under the Bureau’s mortgage servicing rules.

• Require Confirmation of Successors in Interest’s Status. The 2016 Mortgage Servicing Rule generally requires mortgage servicers that are subject to the mortgage servicing rules’ policies and procedures requirements to maintain policies and procedures reasonably designed to ensure that they can promptly (a) identify and facilitate communication with a potential or confirmed successor in interest, (b) provide the potential successor in interest with a description of the documents the successor in interest must provide to establish their identity and ownership interest in the property, and (c) notify the person of his or her status as a successor in interest upon receiving required documents.

• Broaden the Definition of Successor in Interest. The new definition includes not only relatives who receive an ownership interest in the property upon the death of the borrower, but also persons who receive an ownership interest in the property through divorce or through certain other transfers.  The new definition of “successor in interest” is in the Code of Federal Regulations at new 12 CFR Section 1026.2(a)(27)(i).

If we can assist you and your loved ones, please contact one of the experienced attorneys at Courtney Elder Law Associates. We will be happy to answer your questions and help you through the process.