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AB-238 Mortgage forbearance: state of emergency: wildfire.(2025-2026)

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Date Published: 01/13/2025 09:00 PM
AB238:v99#DOCUMENT


CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION

Assembly Bill
No. 238

Introduced by Assembly Members Harabedian and Irwin
(Principal coauthors: Assembly Members Bryan, Caloza, Fong, Mark González, Ransom, Celeste Rodriguez, Schiavo, Schultz, and Zbur)

January 13, 2025

An act to add Title 19.1 (commencing with Section 3273.20) to Part 4 of Division 3 of the Civil Code, relating to wildfire relief, and declaring the urgency thereof, to take effect immediately.


LEGISLATIVE COUNSEL'S DIGEST


AB 238, as introduced, Harabedian. Mortgage forbearance: state of emergency: wildfire.
Existing law requires a mortgage servicer to comply with applicable federal guidance regarding borrower options following a forbearance relating to the COVID-19 emergency.
This bill would authorize a borrower who is experiencing financial hardship due to the wildfire disaster described in the proclamation of a state of emergency issued by Governor Gavin Newsom on January 7, 2025, to request forbearance on their mortgage loan. The bill would require the borrower to affirm that they are experiencing a financial hardship during the wildfire disaster. Because the bill would expand the crime of perjury, the bill would impose a state-mandated local program.
This bill would require a mortgage servicer to, with no additional documentation required other than the borrower’s attestation to a financial hardship caused by the wildfire disaster and with no fees, penalties, or interest, provide the forbearance for up to 180 days, which may be extended for an additional period of up to 180 days at the request of the borrower. The bill would also prohibit a mortgage servicer from initiating any foreclosure process, moving for a foreclosure judgment or order of sale, or executing a foreclosure-related eviction or foreclosure sale.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
This bill would declare that it is to take effect immediately as an urgency statute.
Vote: 2/3   Appropriation: NO   Fiscal Committee: YES   Local Program: YES  

The people of the State of California do enact as follows:


SECTION 1.

 Title 19.1 (commencing with Section 3273.20) is added to Part 4 of Division 3 of the Civil Code, to read:

TITLE 19.1. Mortgage Deferment Act

3273.20.
 This title is known, and may be cited, as the “Mortgage Deferment Act.”

3273.21.
 For purposes of this title, the following terms have the following meanings:
(a) “Borrower” means a natural person who is a mortgagor or trustor or a confirmed successor in interest, or a person who holds a power of attorney for a mortgagor or trustor or a confirmed successor in interest.
(b) “Mortgage loan” means a loan that is secured by a mortgage and is made for financing, including refinancing of existing mortgage obligations, to create or preserve the long-term affordability of a residential structure in the state, or a buy-down mortgage loan secured by a mortgage, of an owner-occupied unit in this state.
(c) “Mortgage servicer” means a person or entity who directly services a loan or who is responsible for interacting with the borrower, managing the loan account on a daily basis, including collecting and crediting periodic loan payments, managing any escrow account, or enforcing the note and security instrument, either as the current owner of the promissory note or as the current owner’s authorized agent.
(d) “Wildfire disaster” means the conditions described in the proclamation of a state of emergency issued by Governor Gavin Newsom on January 7, 2025.

3273.22.
 (a) A borrower who is experiencing financial hardship due, directly or indirectly, to the wildfire disaster may request forbearance on the mortgage loan by doing both of the following:
(1) Submitting a request to the borrower’s mortgage loan servicer.
(2) Affirming that the borrower is experiencing a financial hardship during the wildfire disaster.
(b) Upon a request by a borrower for forbearance under subdivision (a), forbearance shall be granted by the mortgage servicer for up to 180 days, and shall be extended once for an additional period of up to 180 days at the request of the borrower, unless, at the borrower’s request, either the initial or extended period of forbearance is shortened.
(c) During the period of forbearance described in this section, no fees, penalties, or interest beyond the amounts scheduled or calculated as if the borrower made all contractual payments on time and in full under the terms of the mortgage contract, shall accrue on the borrower’s account.

3273.23.
 (a) Upon receiving a request for forbearance from a borrower pursuant to Section 3273.22, a mortgage servicer shall, with no additional documentation required other than the borrower’s attestation to a financial hardship caused by the wildfire disaster and with no fees, penalties, or interest, beyond the amounts scheduled or calculated as if the borrower made all contractual payments on time and in full under the terms of the mortgage contract, charged to the borrower in connection with the forbearance, grant the forbearance for up to 180 days, which may be extended for an additional period of up to 180 days at the request of the borrower.
(b) A mortgage servicer shall communicate with a borrower to whom a forbearance has been granted to ensure that the borrower understands that the missed mortgage payments are required to be repaid, although they may be paid back over time.

3273.24.
 A mortgage servicer shall not initiate any judicial or nonjudicial foreclosure process, move for a foreclosure judgment or order of sale, or execute a foreclosure-related eviction or foreclosure sale.

SEC. 2.

 No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.

SEC. 3.

 This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the California Constitution and shall go into immediate effect. The facts constituting the necessity are:
To avert economic and social harm by providing a structure for temporary relief to financially distressed borrowers during conditions of extreme peril to the safety of persons and property that exist due to impacts of the Palisades Fire and windstorm, it is necessary that this act take effect immediately.