California “Repossession and Collections Moratorium Bill” Passes Appropriations Committee

If enacted as law, all repossession, foreclosure and collections activities would be on hold in the state of California until one-hundred and eighty days (6 months) after the end of the Federal Crisis

Sacramento, CA – 3 June, 2020 – In a 12-5 vote count, the California State Assembly Appropriations Committee “rubber stamped” and passed AB 2501, the COVID-19: homeowner, tenant, and consumer relief Law of 2020”.  This was it’s second step on its way to becoming law. If enacted as law, all repossession, foreclosure and collections activities would be on hold in the state of California until one-hundred and eighty days (6 months) after the end of the Federal Crisis and decimate the entire repossession and collections industry in the state of California for possibly years to come.

See AB 2501 Here!

This bill will move along to the California State Assembly for floor vote on a date yet to be released. Under normal circumstances, and perhaps even before the recent civil unrest, this bill would have been inconceivable and impossible to pass. Unfortunately, we are now watching this slow moving economic train wreck resist common financial sense as it barrels toward the utter destruction of the California, collections, repossession, lending and auto sales industries for years to come.

Despite it’s good intentions, the bill does nothing to prevent negative credit reporting and will destroy the access to consumer credit for many years to come as those most affected will be unable to acquire credit to improve their scores. This limited access to credit would trickle down into a tightening of the credit market to all those except the highest credit tranches (720+). This tightening will cripple the auto dealership industry and undoubtedly cause yet more business closures and reductions in staff for lending, collections, repossessions and auto sales further increasing the roles of the unemployed in the state of California.

The bill, drafted by California House Banking and Finance Committee Assemblywoman and Committee Chair, Monique Limon (D) of Santa Barbara and introduced on May 11^th, is receiving heavy opposition from the California Chamber of Commerce, American Bankers Association (ABA), American Financial Services Association (AFSA), Bank Policy Institute (BPI), Credit Union National Association (CUNA), Housing Policy Council (HPC), Mortgage Bankers Association (MBA) and the Securities Industry and Financial Markets Association (SIFMA) as well as the state’s credit union league, the California Credit Unon League, a lobby with very strong Democratic ties.

On the May 17^th,  joint letter from the California Chamber of Commerce, American Bankers Association (ABA), American Financial Services Association (AFSA), Bank Policy Institute (BPI), Credit Union National Association (CUNA), Housing Policy Council (HPC), Mortgage Bankers Association (MBA) and the Securities Industry and Financial Markets Association (SIFMA), it was stated that;

“AB 2501 would undermine these ongoing efforts to help customers by creating duplicative and sometimes contradictory requirements for the mortgage and auto finance industries when viewed alongside federal rules, regulations and program requirements established by Congress, regulatory bodies, federal executive agencies, and government sponsored enterprises.”

In a more direct letter, the California Chamber of Commerce referred to the bill as “JOB KILLER” and that “Requiring these institutions to potentially go years without receiving payment is a significant burden that will negatively impact financial opportunities for Californians.  Given the financial risk this proposal creates for such institutions, there is no question that the institutions will limit the mortgage and auto loans it offers.  There will likely be stricter criteria to qualify, or, higher rates to offset the potential loss these institutions could suffer under AB 2501.  This limitation will have a negative impact on the housing market, further exacerbating the housing crisis and creating job loss in the housing industry.  It will also unquestionably limit car loans, especially for those with problematic credit history, and will harm both consumers and workers in the auto industry.”

While the larger national and state financial associations have considerable clout, they do not represent the expressed interests of the repossession industry and your support of the California Association of Licensed Repossessors (CALR) lobby is still very much needed. Please donate today!

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