How to manage your mortgage or rent
How to manage if mortgage or rent can’t be paid while shelter in place order is in effect
The Shelter in Place Orders and the coronavirus pandemic are causing serious financial conditions for people living in Santa Cruz, San Jose, Santa Clara and the bay area. Non-essential workers have been laid off, and most people are working reduced hours. Most families do rely on dual incomes, so most families have at least one person who is no longer bringing in any income. Unemployment is a small help, but in most cases for people living in the bay area, unemployment will not even be enough to pay the rent.
With Schools closing, parents are now acting as teachers too, being forced to home school their children. This situation is very stressful for most families.
Does the federal law help people in California?
The federal law enacted by President Trump, the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, has two provisions that help homeowners:
- A foreclosure moratorium for 90 days (which should end on or about July 1, 2020 if not extended);
- A right to a forbearance for homeowners with federally backed mortgages due to the COVID-19 emergency.
The CARES act does apply to people living in California even though it is a federal law. The key is discerning whether your mortgage is federally backed, and if it is, then the mortgage servicer must follow the Act. If you aren’t sure if your loans are federally backed, the Consumer Financial Protection Bureau has a portal that allows consumers to input their names and other information in order to determine whether their loans are backed by Fannie Mae or Freddie Mac you can use the following link. https://www.consumerfinance.gov/ask-cfpb/how-can-i-tell-who-owns-my-mortgage-en-214/
If your loan is not federally backed, the Shelter in Place order from Gavin Newsom will cover the loans and require a forbearance for 90 days. The problem is that the mortgage document still controls and requires that the payments still be made, and for most loans, if the payment is not made, after the forbearance period expires, the full amount of the missed payments will be owing. A mortgage modification packet should be requested and processed, to request that any arrears are put onto the back end of the loan.
If the stress of the missed mortgage payments is too much, a bankruptcy case (Chapter 13) can be filed that would enable a person to cure or reinstate the missed payments over a 36 to 60 month term. We, at Evans Law Offices, have filed bankruptcy for people in the bay area, San Jose, Santa Cruz, Alameda County and San Francisco for twenty-four years. For most cases, most if not all of the attorneys’ fees are put into the repayment plan. We are here to help in any way that we can, that’s why we offer a free consultation and flexible attorney fee plans.
What about people who pay rent and can’t afford to make those payments?
People living in San Jose, Santa Clara, Santa Cruz, Campbell, Sunnyvale and other cities in the Bay Area are protected against eviction until May 31,2020. Gavin Newsom’s executive order states that evictions will not be allowed until after 5/31/20. The problem with the order is that with people’s income evaporating, even when the Shelter In Place Order lifts, the damage will already be done, and people will be behind with their rental payments.
See the executive order re rental payments. https://www.gov.ca.gov/2020/03/16/governor-newsom-issues-executive-order-to-protect-renters-and-homeowners-during-covid-19-pandemic/
Combined with the efforts of Gavin Newsom, you should write a letter to your landlord and tell them that you will work to catch up on the mortgage. A 12 month catch up window is reasonable to propose. We should all write a letter to Gavin Newsom and tell him that we need more for the California Act, we need more to ensure that people aren’t displaced in the long run and that landlords must accept a reasonable period of time to assist a person to catch up their payments before evicting them. A letter template follow this blog post.
The Honorable Gavin Newsom
Governor, State of California
State Capitol, 1st Floor
Sacramento, California 95814
Dear Mr. Newsom,
I am writing to make an appeal to change or expand the law that exists due to COVID-19 for eviction protection. While the law creates a moratorium for evictions until May 31, 2020, the law is silent with respect to how people are to handle the back payments that will be owing. With the current state of the law, landlords will immediately evict people due to these delinquencies once the moratorium is lifted. The law needs to have a procedure to allow people to become current with their rent in a reasonable period of time.
People who file bankruptcy will get a level of protection to reinstate their lease or rental arrears. People should not have to use the bankruptcy Shelter in Place law in order to survive through this crisis. I am suggesting that the law be amended to allow people a period of time to “catch up” on their back payments after the moratorium lifts. The suggested period of time is 12 to 18 months. Some period of time must be proposed. The current state of the law just delays the financial downfall and increase in homelessness that will occur if landlords are allowed to evict people before they are on their feet. We urge these changes to the limited eviction protection currently afforded to renters under the executive order.
Renter in Distress