Gov. Phil Murphy announced Saturday afternoon that New Jersey is instituting a 90-day grace period for home mortgage payments for borrowers impacted by coronavirus.
Murphy also urged banks to work with consumers on credit cards, too.
The relief on mortgages is for residential loans only, commercial loans do not apply.
And, while Murphy did not announce any specific programs for renters, he reiterated that a previous executive order prevents evictions for nonpayment. Murphy stressed it is a time for landlords — many of whom will benefit from the mortgage rules — to work with their renters.
“So, put together, a 90-day grace period and a moratorium on foreclosures and evictions means many New Jersey families can breathe easier, keep their heads above water and have a place they can continue to call home,” he said during his daily coronavirus briefing.
Murphy said unprecedented times called for such measures.
“Millions of hardworking New Jerseyans are suffering financial losses through no fault of their own as a result of the economic downturn brought on by COVID-19,” he said. “With this initiative, we can ensure that no one loses their home during this public health crisis. I commend our private sector partners for doing their part to reduce financial uncertainty for New Jersey families.”
This relief, he said, should possibly extend to credit cards, too.
“As appreciative as I am of all the banks that signed onto this initiative, now is the time to do even more,” he said. “I urge, and expect, our financial institutions and credit card companies to do the right thing in all areas of their businesses.
“That also means lowering credit card interest rates to reflect the reality many families are living, to waive late fees and exercise compassion when people call with financial hardship. We all need to get through this together and come out of it together.”
Who qualifies for any or all of this is unclear.
“This is going to depend on your relationship with your particular bank,” he said. “And that’s the place folks should go.
“In terms of your qualification and exactly how that plays out, it’s between mortgage payer and the bank servicing it.”
Mike Affuso, the director of government relations for the New Jersey Bankers Association, said he believes there will be an effort to qualify people as opposed to denying people.
“There will be some application process and you’ll have to show some proof that you actually have been impacted,” he said. “But the governor wants the rules to be liberal and I believe they will be pretty lenient.
“They’re not going to be asking a whole lot of questions, but you are going to (have to) demonstrate some minimal way that you’ve been impacted.”
Only one bank immediately responded to a request for clarification of eligibility. A Wells Fargo spokesman said the grace period will be given to all who request it.
“There are no special circumstances necessary for the 90-day payment suspension for any Wells Fargo Home Lending mortgage or home equity customer,” the spokesperson said.
This undoubtedly Murphy’s goal for all. He also said he anticipates those requesting the 90-day grace period will simply have three additional months tacked onto their mortgage, as opposed to having a larger one-sum payment due down the road.
Murphy also said consumers who use the 90-day grace period cannot have it used to downgrade their credit rating. He also said lenders will waive any late fees, or other costs which would otherwise arise, because of this 90-day grace period.
Murphy said the state has secured support from Citigroup, JPMorgan Chase, U.S. Bank, Wells Fargo and Bank of America, in addition to over 40 other federal and state-chartered banks, credit unions and servicers, to protect New Jersey homeowners. More financial institutions are expected to sign on in the coming days.
The Governor’s Office said the New Jersey Bankers Association, CrossState Credit Union Association and the Mortgage Bankers Association of New Jersey have endorsed this initiative and are encouraging all their members to adopt these policies.
This is about working together in unprecedented times, he said.
Murphy said he is still trying to navigate assistance to renters, which is a trickier situation for a number of reasons. (See this story.)
Murphy, however, reiterated that an executive order prevents evictions during this state of emergency — something he said he will enforce with vigor.
“We have begun hearing stories of landlords who are attempting to evict tenants during this emergency,” he said. “To any renter facing eviction, let me be clear — under my executive order, your landlord cannot kick you out of your home during this emergency.
“And, for any landlord who is getting mortgage relief today — we expect you will, in turn, provide similar relief to your tenants.”
Murphy urged renters to go to the state’s online portal at covid19.nj.gov, and search for “rental assistance” for more information.
“To every landlord, I cannot stress this enough — now is a time to show some compassion, and to work with your renters to ensure they stay safe and in their homes,” he said. “This is not the time to be raising rents. And, as I mentioned, you cannot evict anyone at this time, and if you try to, we are not going to take that lightly, and we will make an example out of you for violating the law.”
Here are the rules and regulations of his mortgage announcement, as released by the Governor’s Office:
90-day grace period for mortgage payments
Financial institutions will offer, consistent with applicable guidelines, mortgage payment forbearances of up to 90 days to borrowers economically impacted by COVID-19. In addition, those institutions will:
- Provide borrowers a streamlined process to request a forbearance for COVID-19-related reasons, supported with available documentation;
- Confirm approval of and terms of forbearance program; and
- Provide borrowers the opportunity to request additional relief, as practicable, upon continued showing of hardship due to COVID-19.
No negative credit impacts resulting from relief
Financial institutions will not report derogatory tradelines (e.g., late payments) to credit reporting agencies, consistent with applicable guidelines, for borrowers taking advantage of COVID-19-related relief.
Moratorium on initiating foreclosure sales or evictions
For at least 60 days, financial institutions will not initiate foreclosure sales or evictions, consistent with applicable guidelines.
Relief from fees and charges
For at least 90 days, financial institutions will waive or refund at least the following for customers who have requested assistance:
- Mortgage-related late fees; and
- Other fees, including early CD withdrawals (subject to applicable federal regulations).
Please note that financial institutions and their servicers are experiencing high volumes of inquiries and may recommend using online services when available for the quickest service. Loans held by a financial institution may be serviced by another company.
Last week, Murphy signed Executive Order No. 106, which imposed a moratorium on removing individuals from their homes pursuant to an eviction or foreclosure proceeding while the order is in effect. Tenants cannot be asked to leave their homes for nonpayment of rent during this time.
Murphy also announced that the 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. These funds, based on the increased utilization New Jersey achieved in the program last year, are critical to helping current voucher tenants maintain their housing stability during the coming year.