Legal Alert

California Governor and Financial Services Agree to COVID-19 Consumer Relief

March 27, 2020

On Wednesday, March 25, 2020, California Governor Gavin Newsom and a long list of mortgage lenders and servicers—including major banks and nearly 200 state-chartered banks, credit unions, and servicers—reached an agreement to provide much needed relief to homeowners and consumers. This agreement is similar to provisions for federally backed mortgage loans in the stimulus legislation, summarized here, that passed the U.S. Senate on the same day.

The group has agreed to various relief provisions for COVID-19-related hardship in areas, including mortgage forbearance, credit reporting, foreclosure and eviction, and fees and charges. The Governor’s website has published the announcement, and a consumer information page for obtaining financial relief has been added to the state’s COVID-19 response web site.

90-Day Forbearance

Forbearances of up to 90 days will be offered to borrowers, consistent with applicable guidelines, to borrowers economically impacted by COVID-19. In addition, borrowers will be provided with a streamlined process to request forbearance, confirm approval and terms of the forbearance, and be provided the opportunity to request additional relief for continuing hardship. Some supporting documentation may be required.

Credit Reporting

Financial institutions have agreed, consistent with guidelines, to not report negative credit to consumer reporting agencies for borrowers experiencing hardship and utilizing COVID-19 related relief.

Foreclosure and Eviction

Foreclosure sales and evictions will not be initiated by financial institutions for at least 60 days, consistent with applicable guidelines.

Fees and Charges

For a minimum of 90 days, financial institutions have agreed to waive or refund mortgage-related late fees and other fees, including early CD withdrawals (subject to applicable federal regulations) for consumers who have requested COVID-19 assistance. 

Copyright © 2020 by Ballard Spahr LLP.
(No claim to original U.S. government material.)

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This alert is a periodic publication of Ballard Spahr LLP and is intended to notify recipients of new developments in the law. It should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own attorney concerning your situation and specific legal questions you have.

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