Most major banks have agreed to establish a 90-day grace period on residential mortgages and foreclosures amid the coronavirus COVID-19 outbreak, Gov. Gavin Newsom announced Wednesday.
Four of five of the largest banks — JP Morgan Chase, U.S. Bank, Citibank and Wells Fargo — and about 200 state charter banks and credit unions have “committed to the state of California that they will provide forbearance for bans on foreclosures and on mortgage payments,” said Newsom during a live Facebook broadcast.
Bank of America committed to a monthlong waiver of payments for those impacted by the coronavirus. Newsom said he hopes the bank would reconsider making an extension to 90 days.
In a statement Wednesday, Bank of America said it “is deferring mortgage payments on a monthly basis until the crisis is over.” The bank has also agreed to pause all foreclosures, evictions and repossessions.
Newsom added that while the state does not have regulatory oversight of the banks, “I know that the banks certainly are sensitive to… not just on the issue of being able to pay their mortgages and having a grace period of 90 days but also on credit ratings.”
The three-month grace period could last longer due to the fluidity of COVID-19 developments but homeowners should know that late payments would not be penalized. While there are no income provisions for forbearance, homeowners will have to provide evidence of how they have been affected by the coronavirus — but it won’t be a laborious process with documentation, as it was during the 2008 housing crisis, the governor said.
On ATM fees and overdraft charges, Newsom said he would announce additional details in the coming days.
The agreement between banks comes after an estimated 1 million residents across the state have already applied for unemployment benefits in March, according to Newsom, following a series of layoffs and orders for workers and employers alike to stay at home in an effort to prevent the spread of the virus.