A California proposed law, while well intentioned, has the potential to cause significant disruptions in the mortgage markets and limit access to credit, CUNA and other financial organizations wrote to a California lawmaker Monday. The law in question is the COVID-19 Homeowner, Tenant and Consumer Relief Law of 2020 (AB 2501).
“The financial services industry is taking unprecedented steps to assist its customers during the COVID-19 pandemic... AB 2501 would undermine these ongoing efforts to help customers by creating duplicative and sometimes contradictory requirements for the mortgage and auto finance industries when viewed alongside federal rules, regulations and program requirements established by Congress, regulatory bodies, federal executive agencies, and government sponsored enterprises,” the letter reads. “These conflicts have the potential to significantly disrupt access to credit for California borrowers, as well as the securitization market that provides needed liquidity for the mortgage market.”
The letter also notes AB 2501 diverges from federal provisions providing foreclosure and forbearance protections for all Americans during the health crisis, and the bill would “create a patchwork of differing standards and timelines that are likely to confuse borrowers without enhancing consumer choice or protections.”