State of California Assembly Bill 238 to Force Lender to Provide Forbearance to Fire Victims

California state law makers are working on a an Assembly Bill 238 which will require mortgage servicers to grant forbearance for up to 180 days and a one time extension for another 180 days the borrowers request. The following are the highlights of the bill:

California’s Mortgage Deferment Act: Relief for Wildfire Victims

In response to the devastating Palisades Fire and windstorm, California has enacted the Mortgage Deferment Act, a new law providing temporary financial relief to homeowners affected by the disaster. Signed into law as an urgency statute, the act immediately grants mortgage forbearance options to those facing financial hardship.

Key Provisions of the Act

Who Qualifies?

Homeowners experiencing financial hardship due to the wildfire disaster can request mortgage payment relief by:

  1. Submitting a request to their mortgage servicer.
  2. Affirming their hardship was caused by the wildfire.

Forbearance Period

  • Eligible homeowners can pause their mortgage payments for up to 180 days.
  • A one-time extension for another 180 days is available upon request.
  • No extra fees, penalties, or interest will accrue during the deferment period.

Protections for Borrowers

  • Mortgage servicers must grant forbearance without requiring additional documentation beyond the homeowner’s hardship statement.
  • Foreclosures are prohibited while forbearance is in effect, meaning no eviction or sale can take place.
  • Servicers must communicate repayment options to ensure homeowners understand how to catch up on missed payments.

Why This Law Matters

This act provides immediate relief for homeowners struggling with the economic fallout of the wildfire disaster. By pausing foreclosures and offering interest-free deferment, California aims to prevent financial devastation and provide affected families the breathing room they need to recover.

For those impacted, it’s essential to contact your mortgage servicer as soon as possible to take advantage of this relief program.

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