California Long Term Mortgage Forbearance Bill Goes to Vote August 18
Your Help Needed!
Slithering across the state assembly floor, AB-1436 passed largely unopposed and unnoticed while it’s parasitic clone died with its attachment to AB-2501, the Repo and Foreclosure Moratorium Bill. Apparently, the combined forces of the auto lending and repossessions communities were too large for them to overcome, so they’re employing the ages old strategy of “divide and conquer and leaving the credit union industry left out to wither and die.
AB-1436 is a long term required mortgage forbearance law that would ban foreclosures and evictions in the state until April of 2021. Written by San Francisco Assemblyman David Chiu, this bill had passed unchallenged through the house assembly and stands to go for vote in the state Senate Judiciary Committee on August 18th.
For mortgage holders, the bill, similar to AB-2501, requires all lenders to provide forbearances to any mortgage borrower or renter on request, either orally or in writing until the defined; “covered time period” for purposes of these provisions as the time between March 4, 2020, and either 90 days after the termination of the COVID-19 state of emergency or April 1, 2021, whichever occurs earlier.
Well intentioned as it may be, the critical thinking surrounding the requirement of long-term mortgage forbearances is short sighted and favors the “Big Banks”. These large national banks have sufficient capital and national portfolios not subject to this bill’s provisions and this bill poses limited risk to their survival of the big banks.
Unfortunately, the California State Assembly is again showing either their ignorance of, or ambivalence to, the credit union industry, to whom this bill poses a radical threat.
May 2020 credit union financials had already demonstrated a 40% reduction in incomes and second quarter financials show dramatic reductions in income that threaten the credit union industries capital. The bulk of these losses occurred from both additional credit loss reserves as well as the mass forbearances already voluntarily provided by the credit union and small banking industries for periods of 2-3 months on average. These were performed voluntarily. This is what credit unions do for their members in times of financial stress, as was already demonstrated during the “Great Recession” of 2008-2009.
Additional no questions asked, long term and required forbearances pose a dramatic and real threat to the survival of the credit union movement. Long term forced forbearances will cost this industry thousands of jobs, worsening already record high unemployment numbers caused by state mandated shelter laws and closure of “non-essential” businesses over the past five months.
This bill prevents credit unions from serving the financial needs of their members and communities during the time that they will be needed the most. Many will not survive and many of their members will then become reliant of the “Big Banks.”
AB 1436 will be heard in the Senate Judiciary Committee on Tuesday, August 18 th. If the bill passes out of committee, it will quickly head to the Senate Floor. We need YOU to reach out to your Senator and ask them to protect your credit union and vote no on AB 1436.
Tell your Senator to vote NO on AB 1436 or demand amendments that would protect credit unions.
Facebook Comments