Special Alert: California governor announces financial relief package during Covid-19 crisis
On March 25, California Governor Gavin Newsom announced a financial relief package (Proposal) and related guidance to assist borrowers in California experiencing financial hardship as a result of the Covid-19 outbreak. According to the news release, the relief efforts are being supported by several of the nation’s largest national banks, as well as by nearly 200 state-chartered banks, credit unions, and other servicers operating in California (Participating Financial Institutions). Under the Proposal, California borrowers of residential mortgage loans may be eligible for relief with respect to mortgage payments, credit reporting, foreclosures, evictions, and late fees and charges.
Californians seeking relief must apply directly with their Participating Financial Institution. In addition, the terms of any relief or forbearance provided under the Proposal will be agreed to between customers and Participating Financial Institutions directly.
Specifically, Governor Newsom announced that effective March 25, Californians may contact their financial institution, if impacted by Covid-19, to determine whether they are eligible for the following forms of relief.
Mortgage Payment Grace Period
Under the Proposal, Participating Financial Institutions will allow homeowners economically impacted by Covid-19 to request a forbearance on their residential mortgage payment for up to 90 days. The process to apply for a forbearance will be streamlined, but borrowers will be required to support their requests with available documentation. Participating Financial Institutions also will allow borrowers to request additional relief, where practicable, if there is a showing of continuing hardship due to Covid-19, beyond the initial forbearance period.
The exact terms of the forbearance program will be determined by each Participating Financial Institution, consistent with applicable guidelines.
Foreclosure Sales and Eviction Grace Period
Under the Proposal, Participating Financial Institutions will not initiate any foreclosure sales or evictions for at least 60 days.
Waiver of Certain Fees and Charges
The Participating Financial Institutions have agreed to either waive or refund the following fees for at least 90 days for any customer who has requested relief under the Proposal:
- Mortgage-related late fees
- Fees relating to early CD withdrawals, subject to applicable federal regulations
- Other fees, subject to applicable laws and regulations
Relief from Credit Reporting
Under the Proposal, customers will not be subject to any negative credit reporting for late or missed payments in connection with taking advantage of the Covid-19 relief included in this proposal.
If you have any questions regarding California’s financial relief package, or other related issues, please contact a Buckley attorney with whom you have worked in the past. You can also visit our Covid-19 News & Resources page for a compendium of issuances by federal and state agencies, as well as GSEs and other sources.