December 5, 2021

Acqua NYC

Fit And Go Forward

Mortgage relief and help for renters promised in California Democrats’ coronavirus plan

A month after the California Assembly rejected a measure to provide temporary mortgage relief for homeowners affected by COVID-19, two Democrats have teamed up to nestle elements of the bill into an eviction moratorium that’s already halfway through the Legislature.

The previous effort, Assembly Bill 2501, failed on a 28-25 vote on June 15, ending Democratic Assemblywoman Monique Limón’s attempt to offset a financial burden for homeowners struggling during the pandemic.

The bill would have additionally allowed borrowers to postpone auto and payday loans. Twenty-six Assembly members did not vote on the bill, which bankers, creditors, car dealers and financial services representatives opposed. Real estate and business groups argued it would force lenders to permanently close their shops.

Meanwhile, Assemblyman David Chiu, D-San Francisco, is pushing a bill to prohibit landlords from evicting renters who miss payments until the end of the coronavirus state of emergency, plus three months, or between March 4, 2020 and April 2021, whichever deadline comes first.

The measure would allow renters another year to make up the payments before a landlord could pursue legal action, though tenants would still be protected against eviction as long as they’re currently paying rent.

Chiu used a process called “gut and amend” for Assembly Bill 1436, which had already moved through his house last year and now awaits the Senate’s approval. AB 1436 is expected to be heard in the Senate Judiciary Committee on Aug. 12.

The two Democrats announced Tuesday they would include the mortgage forbearance provision in the eviction bill.

“Preventing a wave of evictions and foreclosures is critical to stabilizing our economy and keeping our communities healthy,” Chiu said in a statement. “These new amendments take a more holistic approach to our COVID-related housing emergency by balancing the needs of tenants and property owners.”

Under the revised legislation, Californians could request one-year forbearance for smaller properties of up to four units. Postponed payments for larger properties would be capped at six months. Borrowers could request forbearance until the pandemic ends, or until April 2021.

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Residents asking for either the rent or mortgage relief would have to prove a hardship related the coronavirus to receive the protections. Under both scenarios, renters and borrowers would have to resume consistent payments once the grace period ends.

The legislation could offer hope for Californians worried over losing their homes as the economy worsens and the United States struggles to gain control over the deadly virus. California’s unemployment rate has skyrocketed to 14.9%, according to the U.S. Bureau of Labor Statistics.

More than 586,000 Californians don’t think they can make their mortgage payment next month, per federal Census Bureau data, while another 1.1 million are only slightly confident. More than 4.3 million renters are in the same position.

Help could come from other branches of the government.

Gov. Gavin Newsom extended an executive order that allows local governments to ban evictions until Sept. 30. Congress is debating whether to add protections for homeowners and renters to a developing stimulus package.

“Helping people stay in their homes during this public health crisis must be a top priority for the Legislature,” Limón of Goleta said. “The additional unemployment benefits provided by the federal government have expired, which will likely lead to more tenants missing their rent payments and more homeowners falling behind on their mortgages. AB 1436 provides a path for tenants, landlords, and homeowners to have more time to repay housing payments deferred due to COVID-19.”

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