SACRAMENTO– California Gov. Gavin Newsom has signed into law Assembly Bill 238, which requires lenders to help borrowers experiencing financial hardship due to the Los Angeles firestorms by offering mortgage forbearance for up to 12 months.
This legislation expands on the January agreement the state reached with mortgage lenders to offer forbearance for firestorm survivors for at least 90 days, with many lenders voluntarily offering forbearance for up to 12 months.
“This bill deepens homeowner protections by expanding relief and creating enforceable legal requirements,” the governor’s office said.
The office noted the bill complements another recently signed law, which ensures homeowners receive interest on insurance payments.
What Legislation Provides
The governor said the new legislation provides:
• Financial security. “Homeowners who have suffered a loss by fires should be provided with grace and flexibility as they rebuild and recover.”
• Disaster recovery. “This bill provides financial relief for wildfire victims rebuilding their homes and communities.”
• No impact on credit. “Homeowners who receive forbearance should not be penalized for accessing this important resource. Homeowners will also be protected from late fees, the requirement for a lump-sum repayment at the end of the forbearance period, and the initiation or furtherance of foreclosure proceedings.”
• Transparency. “Lenders who deny these requests are required to provide the specific reason for denial and provide the borrower an opportunity to cure defects in their application.”
