WASHINGTON–The sweeping $2-trillion CARES Act has largely been panned by consumer groups for lacking various protections, but the Consumer Federation of America said in a letter the legislation has taken a few steps toward policies it would like to see enacted.
Among those steps, with CFA’s commentary accompanying each bullet point:
- Create a comprehensive national paid sick leave policy. “Lack of paid sick leave threatens to nullify hard won gains from social distancing. CFA recommended adoption of a comprehensive national paid sick leave policy must ensure that all employees (and their employers) and independent contractors, have the economic support they need to provide paid leave. While this bill and the Families First Coronavirus Response Act, and Congress has provided up to 80 hours of paid sick leave for employees, there are significant gaps. Employers do not have to provide full pay, businesses with fewer than 50 employees and Federal employees of the executive branch can be exempted.”
- Protect homeowners and renters from economic hardship. “CFA recommended forbearance be provided to economically distressed mortgage buyers and to halt evictions and foreclosures for people impacted by the COVID-19 virus. Congress adopted limited measures to address those concerns. On the plus side – impacted consumers with federally-backed mortgages – Fannie Mae, Freddie Mac, Federal Housing Administration, Veterans Affairs, or Rural Housing loans – can receive payment forbearance for 180 days, renewable for another 180. Renters living in properties with federally backed mortgages can get rent relief if the owners seek and get forbearance on their loans. Temporary forbearance can be had without documentation or paperwork. On the other hand, the bill doesn’t cover the 15 million loans held in bank portfolios or in private label securities meaning that not all mortgage consumer will be treated the same. Also, there is no clear provision liquidity needed by nonbank servicers who provide the great majority of the FHA, VA and RHS loans through Ginnie Mae.”
Other Issues
According to the CFA, the bill does less to protect the financial well-being of the most vulnerable Americans, including providing limited assistance for student borrowers, as the CARES Act exempts some, but not all, federal student loan recipients from making payments on those loans for six months, with the interest waived during that period. But borrowers will still need to make up the payments later.
As CUToday.info reported earlier, the CFA said the CARES Act misses consumer protection that includes not curtailing a high-cost lending scheme, not suspending debt collection or placing a moratorium on negative credit report, fails to protect against utility shutoffs, fails to maintain consumers’ access to affordable communications services, and “does nothing for hotel customer and airline passengers while providing extensive financial assistance to corporations.”