California Advances COVID Relief to Struggling Californians
by Kevin Gould, SVP/Director of Government Relations
Since the Legislature’s return in January, the state has taken swift action to advance COVID-19 relief to struggling Californians. Economic assistance provided through the state’s efforts are designed to augment federal relief and extend support to individuals and small businesses that may not have received help in prior efforts.
In late January, the Legislature passed SB 91 (Committee on Budget and Fiscal Review) Chapter 2, Statutes of 2021, extending the renter eviction moratorium relief that was set to expire on January 31. While the measure focuses predominately on renters and landlords, the legislation contains one provision impacting residential mortgage servicers. More specifically, the legislation amends Civil Code Section 3273.1, which was added by last year’s compromise measure, AB 3088 (Chiu) Chapter 37, Statutes of 2020, by extending the definition of “effective time period” from April 1, 2021, to September 1, 2021.
As a reminder, AB 3088 requires mortgage servicers to provide a notice to borrowers in circumstances where forbearance is denied. The notice must set forth the reasons why forbearance is denied and if there is a defect in the borrower’s request, the mortgage servicer must identify the defect and give the borrower an opportunity to cure the defect. These notice provisions were set to sunset on April 1, 2021, but have been extended in SB 91 until September 1, 2021. Also, last year’s compromise requires that mortgage servicers comply with federal requirements pertaining to borrower options following a COVID-19 related forbearance.
Geared to provide protections to small landlords, last year’s compromise expands California’s Homeowner Bill of Rights by applying its provisions to non-owner occupied residential 1-4 properties thereby requiring, among other provisions, that mortgage servicers explore options with the landlord to avoid foreclosure. These expanded protections remain in place until January 1, 2023.
In mid-February, the governor announced a $9.6 billion agreement with the Legislature on early, immediate action items that were initially outlined in the governor’s January budget proposal. Several measures are included in this agreement that seek to provide relief to individuals and small businesses experiencing financial hardship due to the pandemic.
Among these measures, CBA expressed support for AB 80 (Burke), which allows businesses to deduct up to $150,000 of business expenses that were paid for using forgiven federal Paycheck Protection Program loans or Economic Injury Disaster Loan funds. CBA agreed with the underlying intent of the measure which is designed to conform with federal tax relief and to assist California businesses struggling under the economic strain of the pandemic.
Another measure supported by CBA, SB 87 (Caballero & Min), appropriates $2 billion for the California Small Business COVID-19 Relief Grant Program which provides grants to small and micro businesses. Administered through the Small Business Advocate within the Governor’s Office of Business and Economic Development, grants will be made available for up to $25,000 to certain small businesses and nonprofits. Grant funds may be used for costs associated with the COVID-19 pandemic, including: payroll costs, health care benefits, paid sick, medical, or family leave, and insurance premiums; working capital and overhead, including rent, utilities, mortgage principal, and interest payments; and, costs associated with federal, state, or local guidelines for reopening with required safety protocols, such as personal protective equipment, testing, and employee training expenses.
The state will also be furnishing economic impact payments to eligible Californians through the newly approved Golden State Stimulus plan. AB 88 (Committee on Budget) authorizes one-time direct payments of $600 to those who: 1) claim the California Earned Income Tax Credit or that filed a tax return using a federal Individual Taxpayer Identification Number and have income less than $75,000; 2) are California Work Opportunity and Responsibility to Kids Act recipients; 3) receive benefits under the Supplemental Security Income/State Supplemental Program; or 4) are Cash Assistance Program for Aged, Blind, and Disabled Legal Immigrants recipients. Following work done at the federal level surrounding the issuance of economic impact payments, the association continues to work with stakeholders to ensure that these payments are readily identifiable by financial institutions through the inclusion of unique indicators on ACH payments or on state checks and that these payments be protected from garnishment.
While discussions are ongoing at the federal level where Congress continues to negotiate President Biden’s $1.9 trillion economic relief package, the early action by the state should provide meaningful relief to struggling Californians. As with previous federal efforts, the state’s relief measures are an important step toward economic recovery.