MENDOCINO Co., 3/25/20 — California Governor Gavin Newsom announced today that he claims to have obtained agreements from major banks, and smaller state chartered banks, to offer mortgages holders a 90-day grace period due to the coronavirus pandemic and shelter-in-place order. A notable exception to this agreement has been Bank of America, which the governor singled out repeatedly in a live-streamed press conference, saying that they alone the other major banks had not agreed to this relief.
The deal is neither an executive order, nor a new law, but a voluntary deal worked out, apparently by the governor, with various banks. Certain fees will also be waived, and these institutions have agreed to suspend initiation of “foreclosure sales or evictions, consistent with applicable guidelines.”
This announcement does, of course, not apply to renters, but there has been some speculation that this announcement may come be the first step in a broader statewide plan to ease rent payments. Indeed, both Ukiah and Fort Bragg have delayed consideration of local eviction moratorium rules in the belief that guidance or action would soon be coming from Sacramento.
Here is the press release from the governor’s office with further details:
Governor Gavin Newsom Announces Major Financial Relief Package: 90-Day Mortgage Payment Relief During COVID-19 Crisis
Governor Newsom announces financial institutions will provide relief for vast majority of Californians
Californians economically impacted by COVID-19 may receive 90-day grace periods to make mortgage payments
Financial institutions agree not to negatively impact credit reports as a result of accepting payment relief
SACRAMENTO – Governor Gavin Newsom today announced that financial institutions will provide major financial relief for millions of Californians suffering financially as a result of the COVID-19 outbreak.
“Millions of California families will be able to take a sigh of relief,” said Governor Newsom. “These new financial protections will provide relief to California families and serve as a model for the rest of the nation. I thank each of the financial institutions that will provide this relief to millions of Californians who have been hurt financially from COVID-19.”
Governor Newsom secured support from Citigroup, JPMorgan Chase, U.S. Bank, and Wells Fargo and nearly 200 state-chartered banks, credit unions, and servicers to protect homeowners and consumers.
Under the Governor’s proposal, Californians who are struggling with the COVID-19 crisis may be eligible for the following relief upon contacting their financial institution:
90-Day Grace Period for Mortgage Payments
Financial institutions will offer, consistent with applicable guidelines, mortgage payment forbearances of up to 90 days to borrowers economically impacted by COVID-19. In addition, those institutions will:
- Provide borrowers a streamlined process to request a forbearance for COVID-19-related reasons, supported with available documentation;
- Confirm approval of and terms of forbearance program; and
- Provide borrowers the opportunity to request additional relief, as practicable, upon continued showing of hardship due to COVID-19.
No Negative Credit Impacts Resulting from Relief
Financial institutions will not report derogatory tradelines (e.g., late payments) to credit reporting agencies, consistent with applicable guidelines, for borrowers taking advantage of COVID-19-related relief.
Moratorium on Initiating Foreclosure Sales or Evictions
For at least 60 days, financial institutions will not initiate foreclosure sales or evictions, consistent with applicable guidelines.
Relief from Fees and Charges
For at least 90 days, financial institutions will waive or refund at least the following for customers who have requested assistance:
- Mortgage-related late fees; and
- Other fees, including early CD withdrawals (subject to applicable federal regulations).
Loans held by a financial institution may be serviced by another company.
Please note that financial institutions and their servicers are experiencing high volumes of inquiries.