Mortgage forbearance: state of emergency: wildfire.

Assembly Members Harabedian and Irwin have proposed mortgage forbearance protections for California homeowners affected by the January 2025 Eaton Wildfire, Palisades Fire, and related straight-line wind disasters. The legislation establishes a framework for borrowers to request up to 12 months of mortgage payment relief through their loan servicers.

Under the bill, eligible borrowers with residential mortgages on properties of four or fewer units can request an initial 90-day forbearance period, extendable in 90-day increments. Mortgage servicers must notify borrowers of approval within 10 business days and cannot charge late fees or default interest rates during the forbearance period. The legislation prohibits servicers from initiating foreclosure proceedings against borrowers complying with forbearance terms.

The measure includes specific credit reporting requirements, mandating that servicers report forbearance accounts as current or maintain pre-existing delinquent status without noting the forbearance arrangement. The Department of Financial Protection and Innovation must provide online resources about forbearance options and maintain a dedicated phone line for borrower assistance. While the bill aligns with federal servicing guidelines for government-backed loans, it extends similar protections to privately held mortgages, though servicers are exempt from requirements that would conflict with existing investor agreements.