ONTARIO, Calif.–The California league is calling on its member CUs to “act immediately" to help defeat a bill that would allow for lengthy forbearances on mortgages and auto loans.
Defeating AB 2501 is “crucial to the survival of every California credit union,” the league said in an email to its member credit unions.
If passed, Assembly Bill 2501, COVID-19 Homeowner, Tenant and Consumer Relief Law of 2020, would require credit unions to offer inflexible forbearances on both loan types until Jan. 1, 2022. A coalition of financial services trade groups, including CUNA, have already urged the bill’s sponsor, Assemblywoman Monique Limon (D-Santa Barbara) to withdraw or alter the bill.
“It would significantly draw down levels of capital, preventing credit unions from serving their communities and potentially causing layoffs or even mergers,” the California and Nevada leagues said. “We would not ask you to act immediately if this wasn’t urgent.”
Credit unions are being encouraged to have every member of their staff take a moment and participate in the “No on AB 2501” campaign.
As of Friday, the California league said 1,700 messages had been sent to state legislators across California opposing AB 2501. “We need at least 10,000. Your participation is critical,” the league said. “Every credit union employee should act today…Credit unions will see their capital quickly erode if AB 2501 is passed."
In the earlier letter sent by financial services trade associations, the groups said their member financial institutions are already working with consumers to provide relief and solutions for their personal financial situations. AB 2501 would “undermine” those efforts, the letter said, 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. 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.”