With more than a million Californians filing unemployment claims since March 13, Gov. Gavin Newsom has been working with big banks on a deal to make sure homeowners will be protected.
And he struck a deal: Four of the nation’s five largest banks have agreed to delay mortgage payments and suspend foreclosures in California for up to 90 days.
The deal includes Wells Fargo, JPMorgan Chase, Citibank and US Bank, as well as 200 state chartered banks and credit unions, KQED-TV reported.
“It is significant we have some consistency and we don’t have a patchwork — one bank to another,” Newsom said, although Bank of America agreed to only a 30-day suspension of mortgages and foreclosures.
“We still have people that are struggling to get back to where they were before the Great Recession,” Newsom said. “People are older and still struggling. And so these are individuals that once again are disproportionately being impacted by this moment.”
The governor’s announcement on Wednesday came a week after he ordered all California residents to stay at home, with exceptions for doctors, nurses, grocery store employees and truckers.
“We know it’s had an impact on bending that curve and buying us time,” Newsom said. “Let’s not let up.”
Said the Mercury News:
It was not immediately clear Wednesday afternoon how many homeowners might qualify for the waivers or what the eligibility rules for them would be. The governor’s office did not say how to apply, and the banks’ websites do not yet offer details, though some mention the program and direct customers to call.
But Newsom said the waivers would not be capped by income and indicated more details will become available in the coming days. He also said the state wants to make the process consistent and easy for homeowners to navigate, unlike the complex relief programs that followed the 2008 financial crisis.
“We want to ease the document side of this,” Newsom said.
Meanwhile, CNN reported that the $2 trillion stimulus package that passed the U.S. Senate on Wednesday “will allow homeowners hurt by the health crisis to postpone mortgage payments for up to 12 months. That mirrors moves announced last week by mortgage giants Fannie Mae and Freddie Mac.”
The goal is to make sure the millions of job losses caused by the social distancing restrictions imposed by governments don’t spark a wave of foreclosures. That domino effect would crash the real estate market, amplifying the considerable economic pain inflicted by the health crisis.
But that wave of missed mortgage payments threatens to spark a crippling cash crunch in the real estate finance industry unless the Federal Reserve steps in with even more emergency lending. Analysts expect the Fed to step in soon after the stimulus package becomes law. The House of Representatives is expected to pass the stimulus bill Friday.