Governor Gavin Newsom has signed Assembly Bill 238 into law, aiming to provide stronger mortgage relief for homeowners affected by the Los Angeles firestorms. The new legislation requires lenders to offer up to 12 months of mortgage forbearance to borrowers facing financial hardship due to the fires.
Previously, an agreement between the state and mortgage lenders in January provided at least 90 days of forbearance, with some lenders voluntarily extending it up to a year. The new law formalizes these protections and establishes enforceable legal requirements for lenders.
“Homeowners rebuilding after a disaster need all the support they can get, including grace in light of this incredible hardship. This bill is a welcome expansion of the forbearance agreements my administration secured earlier this year with major national and state-chartered lenders to offer mortgage relief to LA fire victims. Recovery requires an all-hands-on-deck approach, and I look forward to additional conversations with lenders in the coming months about how we can continue to support survivors together,” Governor Gavin Newsom said.
The bill also complements another recently enacted law that ensures homeowners receive interest on insurance payments.
Key provisions include financial flexibility for wildfire victims as they rebuild their homes and communities. Homeowners accessing forbearance will not face negative impacts on their credit scores, late fees, lump-sum repayment demands at the end of the period, or foreclosure proceedings during forbearance. Lenders who deny relief must specify reasons and allow borrowers a chance to address application issues.
Further information on California’s recovery efforts following the Los Angeles fires is available through state resources.
