Geraldine Bates lost her husband to kidney failure last year. Now, she has fallen behind on her mortgage payments and is terrified that she will lose her home in Jacksonville, Fla.
Bates, 70, is caught in a foreclosure trap that is ensnaring widows across America: She cannot get help lowering her payments until her name is added to the mortgage note, but the lender says she must be current on payments before that can happen.
"I keep praying," said Bates, who is fighting with the bank to stay in the four-bedroom house.
Just as the housing market is recovering, a growing group of homeowners — widows older than 50 whose husbands alone were holders of the mortgage — are losing their homes to foreclosure because of a paperwork flaw that keeps them from obtaining loan modifications.
In the latest chapter of the foreclosure crisis, homeowners older than 50 are falling into foreclosure at the fastest pace of any age group, according to nationwide data, in part because women from the baby boom generation are outliving their spouses and are unable to cope with cuts in their pensions, ballooning medical costs — and the fine print on their mortgages.
While there are no exact measures of how many widows have entered foreclosure, figures compiled by AARP show the rate of foreclosures among people older than 50 increased 23 percent from 2007 to 2011, resulting in 1.5 million foreclosures.
A few lenders have tweaked their procedures to navigate the problem, and housing advocates are petitioning the Consumer Financial Protection Bureau to devise guidelines for lenders in situations that involve surviving relatives. Banks say that while the volume of delinquent mortgages means that they need a blanket policy to cover all homeowners who are behind on their payments, they are willing to work closely with widows.
Still, interviews with elder-care advocates, housing lawyers and borrowers suggest that the problem is spreading fast across the country, propelled by an aging population. Legal aid offices in California, Florida, Ohio and New York say it is among the top complaints from clients. Billy Howard, a consumer lawyer in Tampa, Fla., said he had more than two dozen cases involving widows, up from virtually none before 2007.
"These women are essentially invisible," said Gladys Gerson, a lawyer for Coast to Coast Legal Aid of South Florida.
At first glance, the issue seems little more than a logistical headache. To stay in the home, the surviving spouse needs to take over the mortgage. But to do that, most banks require that the borrower assuming the mortgage be up-to-date on payments. Housing advocates say that their clients, especially if one spouse experienced a prolonged illness, often find they are already thousands of dollars behind.
"Surviving spouses are trapped without a clear way to preserve their home," said Arabelle Malinis, a lawyer at Housing and Economic Rights Advocates in California.
The conundrum is pushing some widows into foreclosure since it chokes off a lifeline that could save their homes. As of 2011, 6 percent of loans held by people older than 50 were delinquent, up 456 percent from just over 1 percent in 2007, according to a July study by AARP, an advocacy group for Americans older than 50. The study, which housing lawyers say accurately describes the tide of foreclosures claiming seniors’ homes, analyzed mortgage data over a five-year period.
Part of the problem, according to Debra Whitman, AARP’s executive vice president for policy, is that older Americans are saving less and borrowing more. Debt for Americans ages 65 to 74 is outpacing any other group, according to the Federal Reserve.
Some help is on the way. JPMorgan Chase, for example, allows surviving relatives to complete a loan modification and mortgage assumption simultaneously. And the consumer bureau is finishing rules to provide tighter oversight of mortgage servicing companies, which collect payments from homeowners.
Housing advocates say most of their widowed clients still remain in their foreclosed homes.
The trouble for Bates, of Jacksonville, Fla., began after her husband Robert, a World War II veteran, died in February. Robert Bates had obtained a trial loan modification but died before he could make the first payment. Determined to make good on the hard-won plan, Geraldine Bates said she notified HSBC, the servicer, of her husband’s death and sent in a check for $1,125.47.
Bates said she was devastated when the check was returned, with a letter explaining the money could not be accepted because she was not on the mortgage. Bates still owes roughly $131,000 on the original $140,000 mortgage. HSBC declined to comment on the case, but said in a statement, "HSBC has a strong commitment to home preservation and regards foreclosure as a last resort."
Complaints from widows about botched forms, unanswered calls and the peculiar frustration of being asked repeatedly by servicers for the same documents echo the concerns that culminated in a $26 billion settlement in February over other mortgage flaws with the country’s five largest mortgage servicers.
While the process of obtaining a modification can be taxing for healthy homeowners, it can be virtually impossible for older borrowers, many of whom do not have the energy to get through the bureaucracy.
Maria Ginise, a 75-year-old widow, says she has developed dizzy spells from the stress of trying to save her mobile home in Deerfield Beach, Fla. When she and her husband, Joseph, left Connecticut’s icy climes, Ginise said, she dreamed of beach strolls and shuffleboard evenings. But, after her husband died in May 2009, those plans were derailed.
Ginise, whose only income is Social Security, could not afford the payments on her $140,000 mortgage. Since her name was not on the mortgage, though, Wells Fargo, refused to work out a payment plan with her. Now, she is facing foreclosure. A spokeswoman for Wells Fargo declined to comment on Ginise, but said in a statement that the bank reviewed "all applicable, affordable options for customers facing financial difficulties."
In Toledo, Ohio, Florence McKinney said her efforts to seek help with her monthly payments of $814.06 yielded only confusion. In April, for example, McKinney, 69 and a widow, said U.S. Bank sent a letter approving her husband, not her, for a loan modification. "Dear Willie D. McKinney Sr.," the letter read. "Congratulations!" In August, she said, the bank refused her payments altogether. After questions from The , U.S. Bank said it had worked out a modification with Florence McKinney. McKinney did not respond to a request for comment, but her lawyer said the bank had offered her a new modification.
Housing advocates have won reprieves for some homeowners, including Aurora MacDula, 80, in Vallejo, Calif., whose husband died last November. She said when she first contacted Wells Fargo, the servicer, to pay the mortgage, a representative refused to talk to her because she was not on the loan.
In August, with the help of her lawyer, MacDula got a temporary loan modification and is paying $1,733.21 a month. The problem, advocates say, is that most distressed widows do not have the benefit of legal aid.
Malinis, with the housing advocacy group in California, said: "We stay up thinking of the ones who we don’t know about."