Emergency consumer relief bill in California stalls
Legislation in California that would have added broad new financial protections to consumers during the pandemic has stalled.
The bill from Democratic Assemblymember Monique Limón, which drew strong opposition from the financial services industry, failed to pass out of the State Assembly before the body adjourned this week. The result is that the measure cannot be revived this year in its current form.
The legislation would have put temporary prohibitions on foreclosure actions, as well as limits on auto repossessions. Additionally, it would have required mortgage servicers, including those that collect payments on privately backed loans, to offer forbearance of up to 360 days to borrowers experiencing financial hardships.
More than 30% of residential mortgages in California are not federally backed, which means they do not qualify for up to 360 days of forbearance under a pandemic response law that Congress enacted in late March.
The California bill would have also put limits on the fees that payday lenders can charge amid the coronavirus crisis.
At a hearing in May, Limón described her bill as the starting point in a conversation about borrower protections during a period of intense economic hardship. “Without a bill as a vehicle, we don’t have a conversation,” she said.
There was speculation in Sacramento this week that parts of the legislation might still be revived this summer, using a different legislative vehicle. A spokesman for Limón said Friday that she has not made a decision about how to proceed, but added that protecting consumers during the pandemic remains a top priority.
Financial industry officials have been tracking Limón’s bill closely, partly because California is the nation’s largest state, and partly because other blue states often follow California’s lead in the consumer protection realm.
Meanwhile, a more modest California bill that also addresses the economic fallout from the pandemic recently advanced out of the state Senate on a 39-0 vote.
That legislation, which has not drawn industry opposition, would extend foreclosure protections that currently cover owner-occupants so that they also apply to landlords on a temporary basis. It is expected to be considered by the state Assembly later in the summer.