On March 25, 2020, Governor Gavin Newsom announced that four of the five major banks – JP Morgan Chase, Citigroup, Wells Fargo and U.S. Bank – along with nearly 200 state-chartered banks and credit unions agreed to defer collecting mortgage payments from borrowers impacted by the crisis for 90 days. During his announcement the governor stated that “These new financial protections will provide relief to California families and serve as a model for the rest of the nation”.
According to Newsom, the participating banks agreed they will not begin foreclosure or eviction proceedings during the 90 day moratorium and they will not report any late or missed payments to credit bureaus. One notable exception to the group is Bank of America, who only agreed to a 30 day exemption.
In order to qualify for the mortgage deferral, borrowers must be able to document that their hardship was caused by the COVID crisis. Additionally, while this grace period is extended to residential mortgages, it does not include mortgage relief from businesses.
Below are some important details regarding the California mortgage relief announcement:
90 day Grace Period for Mortgage Payments
- Citigroup, JPMorgan Chase, U.S. Bank and Wells Fargo, along with almost 200 state-chartered banks and credit unions will provide a 90 day grace period for mortgage payments
- Borrowers must be able to document their hardship was caused by the COVID crisis.
- Moratorium does not include mortgage relief for businesses, only residential mortgages.
No Negative Credit Impacts
- Financial Institutions will not report late payments on credit cards to credit reporting agencies
Relief From Fees and Charges
- For at least 90 days, financials institutions will waive any fees or charges associated with mortgage payments and other fees
