Arizona Banks Agree to Ease Foreclosures and Evictions, Provide Relief to Borrowers and Small Businesses

Article originally posted on AZ Central on March 31, 2020

In this photo released by Xinhua News Agency, women wearing protective masks to prevent the new coronavirus outbreak chat with each other outside a Lego store at a re-opened commercial street in Wuhan in central China's Hubei province on Monday, March 30, 2020. Shopkeepers in the city at the center of China's virus outbreak were reopening Monday but customers were scarce after authorities lifted more of the anti-virus controls that kept tens of millions of people at home for two months.

Arizona Gov. Doug Ducey and many of the state’s leading banks announced on Monday an agreement to delay housing foreclosures and evictions while providing loans and other assistance to small businesses stressed by the coronavirus outbreak.

Most banks operating in Arizona agreed to suspend evictions and foreclosures for at least 60 days, with the potential to extend that.

Banks also agreed to expedite applications and approvals for small business loans under the $349 billion Paycheck Protection Program passed by Congress and signed by President Trump last week.

Also, most banks agreed to allow loan payment deferrals, and many banks agreed to work with borrowers to defer payments on consumer loans.

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“This COVID-19 situation does not erase financial responsibility,” warned Paris Davis, senior vice president at WaFd Bank Arizona. “The goal is to help consumers and small businesses during this uncertain time.”

Davis said any decision to seek payment delays and other help depends on individual circumstances, including factors such as current cash cushion and employment stability.

Still, most banks around the state are willing to work with customers who have been affected by the COVID-19 outbreak, said Paul Hickman, president and CEO of the Arizona Bankers Association.

“There is broad willingness to suspend evictions and foreclosures, but again, the borrower needs to discuss their situation with their bank,” he said.

Banks outline policies

For example, Chase already has started to help mortgage customers by suspending foreclosures and evictions for 60 days, said Maura Cordova, a spokeswoman for the bank in Phoenix.

“For our struggling small business customers who contact us, we are doing things like deferring payments and waiving associated fees on loans, lines of credit and business credit cards,” she said.

Benito Almanza, Bank of America market president for Arizona, cited several help measures at his company. For example, financially stressed customers — both individuals and small businesses — may request refunds of overdraft fees, nonsufficient-funds fees and monthly maintenance fees, and they can request to defer credit card payments and seek refunds on late credit card fees.

Clients with auto loans may request to defer payments, as can customers with mortgages and home-equity loans.

For customers who otherwise were up to date, there will be no negative reporting to credit bureaus, he said.

Bank of America also has temporarily stopped foreclosure sales, evictions and repossessions.

Wells Fargo announced an immediate three-month payment suspension for any mortgage or home-equity customer who requests it, said LiAna Enriquez, a spokeswoman in Phoenix.

The company is asking customers to make these requests online because of high telephone-call volumes.

“For customers who contact us to take advantage of a payment suspension, we won’t report past-due status to the consumer reporting agencies or charge late fees during the suspension period,” Enriquez said.

After the end of the initial, three-month payment-suspension period, customers might be able to take advance of other options including a further period of payment suspensions or modifying the loan to address longer-term challenges.

Plan follows industry meetings

Ducey announced the agreement after meeting with banking leaders last week and those of other industries to secure commitments to help small businesses and households deal with disruptions caused by the COVID-19 outbreak.

Ducey said the relief measures will help Arizonans facing payments on consumer or business loans when many payments are due starting around April 1.

“We have a long road ahead of us, and we’ll need the continued partnership of Arizona’s banks and landlords to help those facing economic loss because of COVID-19,” Ducey said in a prepared statement.

Borrowers will continue to be expected to meet their financial obligations, but the payment flexibility under the agreement provides help for those facing foreclosure or eviction. The agreement encourages Arizonans to contact their lenders if they are facing short-term hardships before their payment due dates arrive.

“The banking sector in this state is committed to doing everything we can to assist Arizonans in this time of need,” said Jack Berry, chairman of the Arizona Bankers Association, in a statement.

Federal small business program

Arizona banks also will soon start working to provide small business loans as part of the federal Paycheck Protection Program, which was signed into law on March 27.

Under this program, banks can lend up to $10 million to small businesses and sole proprietors who have been disrupted due to COVID-19. The federal Small Business Administration is finalizing details of the program. Arizona banks expect to begin accepting applications for the loans within two or three days after federal guidance is issued. Approved borrowers likely will be able to tap into funds within five business days of their applications.

The Arizona Commerce Authority is partnering with banks to help businesses work through a shortened application process.

Borrowers will need an Internal Revenue Service-issued Employer Identification Number, payroll records and a short statement of how their business has been negatively impacted, said Hickman at Arizona Bankers Association.

“Businesses interested in applying for the loans should prepare that information now so they can apply immediately after banks begin lending,” he said.

More details on the Paycheck Protection Program and related resources can be found at azcommerce.com/covid-19/business-financial-support.

“These two new announcements the governor made this morning are very positive,” said Kimber Lanning, founder of the nonprofit Local First Arizona, which promotes small businesses.

“I am hopeful we are seeing all different parts of Arizona’s economy and business community looking for shared solutions and how can we collaborate so we are enabling the small business community to recover.”

The Paycheck Protection Program loans for small businesses are new and distinct from the “economic injury disaster loans” made available by the Small Business Administration earlier in March.

Those loans for as much as $2 million can be used for a variety of expenses that can’t be paid because of the fallout from the pandemic, said John Balitis, chairman of the labor and employment department at Jennings, Strouss & Salmon law firm in Phoenix.

The new Paycheck Protection Program loans have stricter requirements on how they are spent because some of the loans may be forgiven by the SBA, Balitis said.

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