7 On Your Side helps with widow foreclosure nightmare

AMERICAN CANYON, Calif. (KGO) -- Ask anyone who's ever tried to get a mortgage modification and they'll tell you how tough it can be. The job is made even tougher when the bank refuses to acknowledge you as the rightful owner.

The problem is known as widow foreclosure, but this applies to children or anyone who might inherit a home following the death of a loved one. Those who inherit a home are not listed as the owner on the mortgage, and because of that, getting a bank to talk to you can be difficult.

"Oh, my goodness. My parents. They were married 40 years," said American Canyon resident Lisa Booker.

Lisa has great memories of her mom and dad. Her parents moved to a home in American Canyon back in 2004 so they could be with their grandchildren. Lisa and her husband Deon needed help buying a house. So Lisa's parents agreed to take out the mortgage in their names. Their intent after they died was to leave it for Lisa and her family.

"He was on the loan. We were on the title. We shared title," Deon.

Lisa's father Leon died shortly after moving in with them. Her mother Ella died a few years later. Lisa and Deon continued to pay the mortgage for several years after Ella passed away. But the value of the property dropped and their home was worth less than the remaining mortgage.

The Bookers asked Wells Fargo for a loan modification, but the bank refused to talk to them saying they were not the home owners because their names were not on the loan.

"Now the arrears were growing because they stopped accepting payments. So four, five, six months had gone by so now it's a pretty big amount to pay right," Deon said.

This is where the story gets murky which often happens in the mortgage cases. Wells Fargo says it told the Bookers they needed to assume the loan before the bank would negotiate with them. It blamed the Bookers for delaying the paperwork.

The Bookers said they gave Wells Fargo everything it asked for and submitted it again when the bank denied receiving it.

Lisa and Deon said they gave the bank the deed, the trust and the death certificates, but the bank still wouldn't talk to them.

"It was as if we didn't matter. As if family didn't matter. As if you know, it was just a money game for them," Lisa said.

Wells Fargo declined an on-camera interview, but Beth Mills of the California Bankers Association said, "Banks have admitted in the past that they were unprepared in terms of staffing levels. But in the last several years, banks have really staffed up quite significantly. That's not to say they won't be the unfortunate instance where documentation may get lost or perhaps the person thinks they sent in all the appropriate documents."

In 2012, the Bookers contacted the non-profit legal assistance firm Housing and Economic Rights Advocates for assistance. Attorney Lisa Sitkins say the Bookers tried to make a $7,500 payment to catch up on the loan, but the bank refused it.

"Then they proceed to apply over and over and over again for a loan modification and every time they would get rejected and be told that the house was not 'owner occupied,'" Sitkins said.

The federal Consumer Financial Protection Bureau recently issued guidelines requiring lenders to have a process in place to deal with situations like this. Kevin Stein is with the California Reinvestment Coalition -- a coalition of 300 consumer and advocacy groups.

"The guidance really doesn't go very far. It's not in the rule itself. It's guidance so has a little bit less authority," Stein said.

Stein would like to see California's Homeowner Bill of Rights amended to add penalties and to give widows and orphans the same rights as everyone else for a loan modification. But the bankers association says more regulation is not what's needed.

"I think when we get to the point where foreclosure is the last resort for everybody, I'm not sure where an enforcement action would come into play here," Mills said.

"There seems to be a loophole that seems to work in the banks' favor. So there needs to be some reform to protect the heirs," Deon said.

Wells Fargo eventually granted the Bookers a loan modification, but they've informed us the Bookers have gotten behind in their mortgage and are again in foreclosure. The Bookers say they intentionally missed payments to force the bank into new negotiations for another loan modification.

The bottom line for you is to document everything if you're in this situation and get the help of a certified non-profit housing counselor.