As 1 Million Californians File for Unemployment, Homeowners Hurt by Coronavirus Will Get a Break
By Phil Willon, Liam Dillon,
MARCH 25, 2020, 1:12 PM, SACRAMENTO — LA Times
Several major banks and financial institutions have agreed to delay foreclosures and provide mortgage relief to California homeowners who are struggling to make their monthly payments due to the novel coronavirus outbreak, Gov. Gavin Newsom announced Wednesday.
The assistance comes as more than 1 million Californians have applied for unemployment benefits this month due to layoffs or reduced hours amid the pandemic, Newsom said.
Eligible homeowners would be able to defer mortgage payments for at least three months and perhaps longer if they suffer hardship due to the pandemic. Any late payments would not be reported to credit agencies.
Along with the mortgage assistance, Newsom is urging banks and other lenders to provide financial relief to small businesses and student loan recipients “in the days and weeks to follow,” according to a recent email sent to financial institutions by the state Department of Business Oversight Commissioner Manuel P. Alvarez.
“As we continue the battle on the public health front, we must also brace ourselves for a financial crisis that is only beginning,” Alvarez said in the email. “Now is the time for all institutions, public and private, to do our part in staving off a tsunami of financial harm barreling toward California consumers.”
The governor’s announcement on Wednesday comes a week after he ordered all California residents to stay at home to help stem the spread of the virus, with limited exceptions for essential workers including doctors, nurses, grocery store employees, and truckers. Residents are permitted to leave the house for necessities, such as trips to supermarkets and to see the doctor, and to go outside for recreation, but are urged to keep a safe distance from others.
Thousands of Californians have lost their jobs or have seen their working hours dramatically reduced, particularly in the hospitality and service industry.
Millions of Californians were already struggling to make mortgage and rent payments in a state where housing prices and rent payments have skyrocketed in recent years, putting them a risk of losing their homes due to a sudden loss of income.
Similar mortgage relief measures were put in place for homeowners in response to the Great Recession when housing markets crashed and millions of Americans lost their homes to foreclosure.
The federal government earlier this month announced that Americans with loans backed by the government-sponsored agencies Fannie Mae or Freddie Mac would be eligible to defer mortgage payments and be shielded from foreclosure if they could not afford to make payments due to the outbreak.
More than 30 state lawmakers on Wednesday sent a letter to Newsom asking for a statewide eviction moratorium. They say less than 50 local governments — out of the 539 cities and counties statewide — have passed the local moratorium, which the governor urged last week.
Newsom’s directive allows cities and counties to impose moratoriums on residential evictions, but housing advocates said that left many vulnerable Californians at the mercy of local governments and their vastly different approaches. They also called for a ban statewide to help
people who are under threat of losing their homes, particularly if they aren’t working due to the coronavirus.
Newsom has said he would take additional steps if he felt local jurisdictions were failing to protect their residents from eviction.
The original article can be found here at the LA Times