On Tuesday, May 12, 2020, the Los Angeles Board of Supervisors will consider a “Responsible Banking” motion. Introduced by Supervisors Hahn and Kuehl, the motion requests a report from the County CEO on potential measures to tie financial institutions doing business with the County to certain County priorities related to the COVID-19 crisis. This includes both rent and mortgage relief, given the economic pressures caused by the pandemic. Specifically, the motion lists potential measures including:
1. Requiring financial institutions already providing or seeking County banking business to disclose, within 30 days, the institution’s contributions to meeting the County’s goal of offering mortgage relief conditioned on rent suspension for rental properties in the County during the COVID-19 emergency and the subsequent recovery period;
2. Requiring financial institutions already providing or seeking County banking business to disclose, every 30 days during the COVID-19 emergency, available foreclosure data for mortgage-holding rental properties in the County; and
3. Requiring an evaluation and publicly accessible scorecard of the performance of financial institutions already providing County banking services, specifically related to meeting the County’s goals of both mortgage relief and rent relief to help landlords maintain rental properties and to help renters stay in their homes during the COVID-19 emergency and the subsequent recovery period.
The report is due to the Board of Supervisors by Tuesday, May 26, 2020. Based on actions and discussions that we have seen to date, it is likely that other counties across the state will be watching this ordinance and will be looking to LA County’s actions as setting a precedent for responsible banking requirements in the state.
The City of Los Angeles has a Responsible Banking Ordinance (Los Angeles Admin. Code § 20.95.1) and added rental and mortgage relief criteria to those rules due to the COVID-19 crisis on April 22, 2020. Similar to the County’s proposal, the City’s new COVID-19-related rules include criteria for institutions that “offer mortgage relief paired with rent relief to rental properties in the City.” Specifically, the rules require:
1. Disclosure of programs for mortgagors of rental properties, acceptance and rejection rates for borrowers seeking relief, foreclosure rates (and eviction rates, where the financial institution is a landlord), and information on stimulus funds received and uses thereof;
2. “Scoring financial services bids to prioritize bidders that demonstrate they are providing the greatest available relief to rental property mortgage holders and their tenants during and in the aftermath of the COVID-19 emergency”; and
3. A publicly available scorecard on institutions’ performance regarding the dual goals of mortgage and rental relief.
Note that the County’s proposed new rules would apply to all financial institutions doing business with or seeking to do business with the County.
Manatt will continue to monitor developments on this ordinance. Please reach out to firstname.lastname@example.org or email@example.com for additional information.
For more Los Angeles City- and County-related COVID-19 updates, including reopening timelines and new ordinances, see here.