The Garn-St. Germain Depository Institutions Act of 1982 prohibits lenders from calling in mortgages after the death of one spouse, if there is a surviving spouse. This portion of the law was designed specifically to deal with situations like this one.

This mortgage servicer is blatantly violating federal law.

The servicers are not bound by the settlement that banks made with Gov. over illegal mortgage practices.
That is why the banks sold off the servicing rights en masse over the past year.

A bunch of sub prime servicers bought the rights. Nations Star, Green Tree ( now my servicer) and this company mentioned in the article.
They try to milk the mortgage for anything they can get beyond the payments.
If you do not pay your own insurance, they will buy a policy for you at highly inflated prices, add it to the monthly payment, and same with taxes.
At some point a lot of folks can no longer make the increased payments.
Then the servicer says it will do a modification.

Once it starts the modification process, it will ask for fees.
Most modicfications are never completed because the servicer, having gotten as much money as it can from the home payer, can make one more chunk of money, by foreclosing.
Foreclosing pays the servicer well.

Poor woman made a huge mistake by not having her name on the loan.
Another mistake was letting the insurance and tax payments be controlled by the servicer.
3rd mistake was not getting a real estate attorney the minute a problem arose.

I hope she can find someone to guide her thru this financial land mined issue.

If not, I hope she and her husband took out a 2nd mortgage on the house in the past, refuses to pay any more money and turns the house back to the bank, which will be out the first and 2nd loans.
Seems we citizen consumers are the only ones trying to play by the rules anymore, going meekly to our financial doom brought on my scams and theft of the TBTF institutions.

[font style=color:#FF0000;]there is something terribly wrong with this country, isn't there?[/font]

They owned it outright, but lost it due to property taxes they could not pay, as they were unemployed orphaned minors. Some of them quit school to work and get money, but was too late by then.

The typical hanger on crowd at the courthouse saw the notices, and ended up taking the land for taxes. Some years after that, progressive legislation forbade that practice of speculators who got large acreage for pennies on the dollar in value. They were the vultures of the day.

The OP states this woman is making payments on time. So something does not add up. Mortgages used to include escrow for the taxes, held by the bank until the taxes were due at the end of the year.The bank was responsible for paying taxes out of escrow.

IDK anything about the laws of CA but where I grew up, a home claimed as 'a resident homestead' could not be seized for taxes, only for a mortagage not being paid. In my home state, if taxes were not paid on a paid for property, the state simply put a lien on it. When the owner passed and the property sold, the taxes had to be paid, but no one was put out of their house for it. This has nothing to do with a bank or an unpaid mortgage.

Also, there were exemptions to keep property taxes lower, on the basis of age, disability or military service. The taxes were not that high to begin with. It became very hard, barring some other agreement, to put a person out of their home if they owed only taxes on it.

CA would be the recipient of this tax money, not the bank. So who is pushing for foreclosure, the state of CA or the bank?

I highly doubt she could have made payments on time and made the bank not pay taxes. If they did not pay her taxes, they are to blame, not her. I doubt they are using the language of the law to take the property because they just realized he is dead, and despite perhaps the attempt at humor in the OP about his urn being there, he's not paying taxes or mortgage payments, she is.

And she's either paying the payment or she is not. If anyone has a different experience, let me know, but I come from a family with a lot of real estate brokers and that was the way they explained how taxes are paid, so this is illogical. It also has nothing to do with big bank settlements, they don't apply in every case. I really hope that someone with legal expertise gets this overturned, as it does not make sense.