Mortgage forbearance: state of emergency: wildfire.

Assembly Members Harabedian and Irwin's mortgage forbearance legislation establishes a framework for California homeowners experiencing financial hardship due to the January 2025 Eaton and Palisades wildfires to temporarily pause their mortgage payments. The bill requires mortgage servicers to offer eligible borrowers an initial 90-day forbearance period, which can be extended in 90-day increments up to 12 months.

Under the measure, borrowers must request forbearance before January 7, 2027, or within six months after the termination of the state emergency declaration, whichever comes first. The provisions apply to residential properties with four or fewer units. During the forbearance period, servicers cannot assess late fees, charge default interest rates, or initiate foreclosure proceedings against compliant borrowers. The bill also mandates that servicers report accounts as current to credit agencies during the forbearance period, unless the account was already delinquent.

The Department of Financial Protection and Innovation must publish guidance on its website about forbearance programs and provide a dedicated phone line for borrower assistance. While servicers must comply with the bill's requirements, they receive safe harbor protections when federal servicing guidelines or investor contracts conflict with the state provisions. The legislation takes effect immediately upon enactment to address ongoing economic impacts from the wildfires.