Banks offer mortgage relief as 1 million Californians file for unemployment
With coronavirus cases continuing to rise across much of California and many workers unemployed indefinitely, several major banks and other lenders have agreed to provide mortgage relief to homeowners struggling to make their monthly payments.
The assistance arrives as more than 1 million Californians applied for unemployment benefits over the course of just 12 days through Wednesday because of layoffs or reduced hours amid the pandemic, Gov. Gavin Newsom said Wednesday.
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. Late payments would not be reported to credit agencies.
Along with the mortgage assistance, Newsom is urging the lenders to extend financial relief to small businesses and student loan recipients “in the days and weeks to follow,” according to an email sent recently to financial institutions by state Department of Business Oversight Commissioner Manuel P. Alvarez.
The moves came as public health officials reported a continued increase in COVID-19 cases, including in Los Angeles County, where the county health officer on Wednesday ordered that all those who test positive for the coronavirus self-isolate, along with those in close contact with the infected.
Officials confirmed 138 new COVID-19 cases Wednesday in the state’s most populous county, for a total of more than 800. Three additional deaths brought the total in Los Angeles County to 13. Statewide, more than 3,100 of those tested have been confirmed to have infections, while 67 have died.
Public health officials emphasized that the actual number of people infected is almost certainly higher, but an accurate count is impossible because so few tests have been given.
The mortgage relief package that Newsom described at an afternoon news conference will come from four of the nation’s largest banks — Wells Fargo, U.S. Bank, Citibank and JPMorgan Chase — as well as 200 state-chartered banks and credit unions.
“We still have people that are struggling to get back to where they were before the Great Recession,” Newsom said of the financial struggles Californians have experienced, now exacerbated by the coronavirus outbreak.
Newsom noted that another huge lender, Bank of America, agreed only to allow customers to defer mortgage payments for one month, but said he is hopeful the institution “will do the right thing” in the near future.
Bank of America disputed Newsom’s assertion that it resisted providing more generous mortgage relief to homeowners. “Bank of America is deferring mortgage payments on a monthly basis until the crisis is over,” spokesman Bill Halldin said.
The continued spread of the coronavirus and the resulting wreckage of the economy suggest the need for even greater financial relief for consumers, Alvarez said in his email.
“As we continue the battle on the public health front, we must also brace ourselves for a financial crisis that is only beginning,” Alvarez wrote. “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 came a week after he ordered all California residents to stay home to help stem the spread of the virus, with limited exceptions for essential workers, including doctors, nurses, grocery store employees and truckers.
Thousands of Californians have lost their jobs or have seen their working hours dramatically reduced, particularly in the hospitality and service industries. And the hardships fall on millions in the state who already struggle to make mortgage and rent payments, given skyrocketing housing costs.
The federal government 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 because of the outbreak.
More than 30 state lawmakers on Wednesday sent a letter to Newsom asking for a statewide eviction moratorium. They say fewer than 50 local governments — out of the 539 cities and counties statewide — have passed moratoriums, as the governor urged last week.
Housing advocates called for an eviction ban statewide, particularly for those who aren’t working as a result of the coronavirus. Newsom has said he will take additional steps if he believes local jurisdictions are failing to protect their residents.
Officials warned that the worst days of the pandemic in California are yet to come.
Los Angeles Mayor Eric Garcetti said the city could be six to 12 days from seeing a spike in infections and hospitalizations like the one now afflicting New York City, where the death toll has dramatically increased in recent days.
“It’s coming,” Garcetti said. “The peak is not here yet. The peak will be bad. People will lose their lives.”
San Francisco leaders issued a similar warning, saying it was “plausible” the city could face a crisis similar to the one in New York and fall 1,500 ventilators and 5,000 hospital beds short of the numbers needed.
“It is not even a question as to whether we will need more,” Mayor London Breed said during an hourlong news conference. “Sadly, things are going to get worse.”
Anticipating a surge of patients in the coming days, government officials were working to find additional hospital beds. More than 1,000 beds will be provided by the Navy ship Mercy, which will arrive in Los Angeles on Friday, earlier than expected, according to Pentagon Press Secretary Alyssa Farah.
Officials in Los Angeles and San Francisco rejected suggestions from President Trump that there could be a quick easing of restrictions.
Garcetti said Angelenos should be “prepared for a couple months like this.”
“I know that everybody is hopeful, and some are putting out that hope of us being back in churches by Easter or synagogues by Passover or restarting the economy in a couple weeks,” Garcetti said. “I think we owe it to everybody to be straightforward and honest. We will not be back to … that level of normal in that short period of time.”
Dr. Grant Colfax, director of health for San Francisco, concurred.
“I know there are people out there who will lead you to believe our efforts are too aggressive,” Colfax said, “but I cannot stress enough just how vital they are.”
Los Angeles County Public Health Department Director Barbara Ferrer also said residents should not expect an immediate return to normality.
“We would be foolish to not prepare for a similar scenario in L.A. County,” she said. “We talk about numbers, but these aren’t numbers — these are people’s lives.”
Times staff writers Rong-Gong Lin II, Maura Dolan, Taryn Luna and Colleen Shalby contributed to this report.
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