We are pleased to announce that AB 238 (Harabedian), The Mortgage Forbearance Act, has been signed into law! This new legislation provides urgent financial relief to homeowners in LA wildfire-affected areas, ensuring families can focus on recovery without the immediate burden of mortgage payments.
- What AB 238 Does:
Provides mortgage payment forbearance for eligible homeowners whose properties were destroyed or rendered uninhabitable by the Los Angeles Fires.
• Initial forbearance period: 90 days, with the option to extend for up to 12 months in 90-day increments.
• Protects borrowers from late fees, penalties, extra interest, foreclosure proceedings, and negative credit impacts.
• Requires mortgage servicers to:- Respond promptly (within 10 business days) to requests for forbearance.
- Provide clear explanations for any denial.
- Allow borrowers to cure and resubmit applications if the denial is based on a correctable issue.
- Notify borrowers of documentation requirements for extensions at least 30 days before the end of a forbearance period.
- Directs the California Department of Financial Protection and Innovation (DFPI) to establish a website with guidelines, resources, and a borrower assistance hotline.
Guidance for Homeowners:
If you have been impacted by the recent Los Angeles wildfires and hold a residential mortgage, reach out to your mortgage servicer as soon as possible to inquire about forbearance.
If you encounter any difficulties with your servicer, please notify the Department of Financial Protection and Innovation (DFPI) which is charged with ensuring your rights under this new law are upheld. You can also contact our district office at (626) 351-1917.
Why This Matters:
The Los Angeles wildfires have devastated families, destroying homes and financial security. AB 238 ensures that homeowners have the breathing room they need to stabilize, begin rebuilding, and wait for insurance payouts without the fear of foreclosure. We urge all eligible residents to take full advantage of this relief.
We extend our sincere thanks to our joint-author, Assemblymember Jacqui Irwin, and to Governor Gavin Newsom for signing this critical measure into law.
Together, we are committed to helping our communities recover and rebuild.
