New Jersey mortgage borrowers will be able to get a 90-day grace period on their loans if they have been impacted by the COVID-19 pandemic, Gov. Phil Murphy said Saturday.
Five major banks – Citigroup, JP Morgan Chase, US Bank, Wells Fargo and Bank of America – agreed to this grace period, in which borrowers can either reduce or delay monthly mortgage payments.
Another 40 federal and state-charted banks and credit unions also agreed to the forbearance period, which will not harm credit ratings. During this time institutions will not charge any late fees or other costs.
Saturday’s move follows that implemented in other states, such as California and New York.
“I urge and expect our financial institutions and credit card companies to do the right thing in all areas of their businesses,” Murphy said at a Saturday press conference. He also stated that the state expects landlords getting mortgage relief to pass that on in the form of rent relief to tenants.
“To every landlord, I cannot stress this enough: Now is the time to show some compassion,” he added.
According to Matt Platkin, Murphy’s chief of staff, most of the banks are expected to tack on the three months’ payments to the end of the mortgage, and not require a lump sum payment after 90 days. But borrowers should talk directly to their lenders to understand the terms of the agreement.
Anyone using the grace period would not take a hit to their credit score, nor would they incur any late fees or other costs, Murphy said. Homeowners would have to get in touch with their individual bank to determine whether they would qualify.
“The idea is that it’s going to be done on a fairly liberal basis. There will be some eligibility criteria, but it’s meant to be more inclusive than less,” Michael Affuso, director of government relations at the banking trade group NJBankers, told NJBIZ.
Homeowners would have to show documentation indicating that they are financially struggling due to “COVID-19-related reasons.”
Certain federal lenders would be out of the jurisdiction of what the state has implemented, Platkin said.
Those typically comprise Fannie Mae, Freddie Mac and the Federal Housing Administration. Neither could be immediately reached for comment.
Editor’s Note: This article was updated on March 30, 2020 at 7:35 a.m. to include comments from Michael Affuso.