Ms. 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 Ms. 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 over the age of 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 over 50 are falling into foreclosure at the fastest pace of any age group, according to nationwide data, in part because women 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 over 50 increased by 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, 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 by choking off a lifeline that could save their homes. As of 2011, 6 percent of loans held by people over 50 were delinquent, up from about 1 percent in 2007, according to a July study by AARP, an advocacy group for Americans over 50. The study, which housing lawyers say accurately describes the tide of foreclosures on 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 Ms. Bates, of Jacksonville, Fla., began after her husband Robert, a World War II veteran, died last February. Mr. 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, Ms. Bates said she notified HSBC, the servicer, of her husband’s death and sent in a check for $1,125.47.
Ms. 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. Ms. 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.