As millions of Americans face the prospect of declining wages and layoffs amid the coronavirus pandemic, California Gov. Gavin Newsom announced Wednesday that his state struck a deal with several major banks to give people a break on their mortgage payments.
Newsom touted the deal in a tweet Wednesday afternoon, saying that “families should not lose their homes because of COVID-19.” The deal gives homeowners a 90-day grace period and includes Wells Fargo, Citibank, JP Morgan and U.S. Bank, according Newsom.
Families should not lose their homes because of COVID-19. Very pleased that Wells Fargo, Citi, JPMorgan, and US Bank have agreed to a 90 day grace period for mortgage payments for those impacted by #COVID19.
A big sigh of relief for millions of CA families.
— Gavin Newsom (@GavinNewsom) March 25, 2020
According to KESQ, Bank of America also agreed to provide a 30-day grace period.
Asked how the grace period works for customers, U.S. Bank said that it has a nationwide program that “provides for a minimum 90-day forbearance program with no late fees.”
“If, at the end of the hardship, customers are unable to pay their installments in full, options such as extending the assistance plan, repayment plans, or a loan modification may be available,” a bank spokesperson told Inman in an email.
Wells Fargo told Inman that it is still encouraging people to pay their mortgages, but is “granting an immediate 90-day payment suspension for any Wells Fargo Home Lending mortgage or home equity customer who requests assistance.”
The other banks did not respond to Inman’s request for comment.
However, the deal comes amid major economic upheaval due to the pandemic. The stock market has seen repeated plunges in recent days, and some real estate industry leaders have warned that the U.S. is entering an “economic standstill.” One of the primary reasons for the chaos is that “social distancing” — which has been widely advocated by political and health leaders — has left multitudes of people in service, travel, food, real estate and other industries without work or income.
According to the Centers for Disease Control, there have been 54,453 cases of the illness, and 737 deaths, in the U.S. as of Wednesday. And while areas such as Washington and New York have so far been the hardest hit, Newsom’s state had 2,724 cases as of Wednesday.
Newsom also said during a news conference Wednesday that more than 1 million Californians have applied for unemployment benefits this March.
The deal with the banks follows a growing push to give both homeowners and renters relief as they face increasingly dim financial prospects. Among the relief plans, just days ago Fannie Mae and Freddie Mac announced that would let some homeowners reduce or pause their mortgage payments for up to a year.
Landlords and elected officials have also halted evictions and frozen rent in a bid to give renters some relief.
Additionally, lawmakers on Tuesday passed a $2 trillion economic stimulus package that is meant to further give Americans some relief.
Update: This story was updated after publication with additional comment from some of the banks involved in the deal.