Mortgage relief for many in NJ — but not for everyone
The mortgage relief announced this weekend by Gov. Phil Murphy won’t be for all New Jersey homeowners, as it’s limited to those directly impacted economically by the coronavirus emergency, with the eligibility being determined by lenders on a case-by-case basis.
The New Jersey Bankers Association said the 90-day mortgage forbearance is intended to be made widely available, but decisions on who qualifies for the grace period and what types of documentation will be required will be made by the institutions.
“While I hope we can be a source of information for you, the first port of call if you’re a homeowner should be contacting your lender directly to take advantage of this relief,” Murphy said. “As you can imagine, these lenders are experiencing a high volume of inquiries and they may recommend using online services when available.”
Murphy said the initiative has support from Citigroup, JPMorgan Chase, U.S. Bank, Wells Fargo, Bank of America and more than 40 other federal and state-chartered banks, credit union and services, with more expected to sign on.
Approximately 43 banks from New Jersey participating in the program, said Michael Affuso, executive vice president and director of government relations for the New Jersey Bankers Association.
“This 90-day forbearance is for folks that can show that they have been affected by COVID-19,” Affuso said.
“I don’t think it’s going to be complicated. I think they’re going to have to show they lost a job or had a significant diminution of income,” he said. “I think the rules are going to vary from bank to bank, but it’s meant to be pretty liberal in the standard. But if you are working and you didn’t see a diminishment in income, you have really been inconvenienced but haven’t been financially affected, I don’t think the program is going to be for you.”
The Housing and Community Development Network of New Jersey applauded the mortgage forbearance plan, though its president and chief executive officer, Staci Berger, called it “an essential first step” and that it should be universal.
“What we really think needs to happen is a statewide, uniform, mandatory 90-day forbearance period that folks can just extend their mortgage payments towards the end of their loans and know that they’re not going to have to come up with that mortgage payment for April 1 or May 1 or even June 1,” Berger said.
“Some banks are already doing that voluntarily, and that’s great. The problem or challenge that a lot of folks are facing is that it’s not statewide and that it’s not available to everyone. We really need to make sure that there’s equity and unanimity across the state about what’s available,” she said.
Affuso said isn’t realistic for everyone to be included.
“When you have a government program, it should apply to people that are affected,” Affuso said. “Just telling everybody that they don’t need to make their mortgage payment I don’t think is really a realistic way to operate.”
Murphy and his chief counsel, Matt Platkin, said it is expected that the three months of delayed mortgage payments will be tacked on to the end of the borrowing. Platkin said that isn’t made formal in the state’s agreement because the state doesn’t have jurisdiction over federally backed loans.
“This is going to depend on your relationship with your particular bank and that’s the place folks should go,” Murphy said. “Most I believe are just adding, if you have a grace period of two or three months now it’s being added on the backend of your mortgage. I believe that’s the practice that is most common, but in terms of your qualification and exactly how that plays out it’s between mortgage payer and the bank that is providing it or servicing it.”
Murphy said the program closely mirrors what is being done in California. He said the financial institutions have also committed to not initiate foreclosure sales or eviction proceedings for at least 60 days, building on a new state law and executive order temporarily preventing removals from homes.
Consumers who use the grace period will not have their credit ratings downgraded as a result.
Affected consumers also won’t have to pay fees for things such as early withdrawals from certificates of deposit.
Murphy said he expects financial institutions and credit card companies will “do the right thing in all areas of their business,” such as lowering credit card interest rates and waiving late fees.
The agreement doesn’t directly affect rental properties, though Murphy urged landlords who qualify for mortgage forbearances to pass that on to their tenants.
Berger said the state should use some of the funding it receives through the federal $2.2 trillion coronavirus stimulus law enacted Friday to provide immediate rental assistance.
Among other things, the law includes $5 billion for Community Development Block Grants. After Superstorm Sandy, CDBG funds were used to support a number of housing programs. It also includes $3 billion for housing providers whose low-income tenants are likely to face even bigger financial troubles.
The state Department of Community Affairs received an additional $13 million in federal funds as part of its annual renewal for the Section 8 Housing Choice Voucher Program.
The state has made information about rental assistance available through its online portal, covid19.nj.gov.