California MBA Sounds Alarm Over Lack of Long-Term Fire Assistance Plan
The California Mortgage Bankers Association (California MBA) has addressed mortgage forbearance and the broader challenges facing homeowners impacted by recent wildfires during an oversight hearing on AB 238.
California's AB 238 is a wildfire relief law that requires mortgage servicers to offer disaster-related forbearance to homeowners facing financial hardship from the 2025 wildfires. Eligible borrowers with one- to four-unit residential mortgages can request up to 90 days of forbearance, extendable in 90-day increments for up to 12 months.
Servicers cannot charge late fees, add default interest, report the account as in forbearance or initiate foreclosure during the relief period. Borrowers must attest to wildfire-related hardship and servicers must provide timely decisions and clear reasons for any denial.
The testimony centered on how wildfire-affected homeowners are struggling with both housing instability and mounting fire-related barriers to recovery and why stronger, better-structured mortgage relief is essential to preventing long-term displacement.
Wildfires such as the Eaton Fire and Palisades Fire destroyed large areas, displaced thousands of residents and created a cascading set of challenges. Families described being unable to return home for extended periods because of insurance delays, which slow access to funds needed for rebuilding; permitting backlogs, leading to possible delays in reconstruction timelines by years and severe housing shortages.
These conditions mean that even when homeowners receive temporary relief, they remain vulnerable to prolonged financial and housing instability.
The California MBA emphasized that forbearance is critical short-term relief but not a long-term solution; extending those agreements without a clear exit plan can increase borrower strain once payments resume and lenders and servicers must coordinate with state agencies to ensure relief aligns with real-world rebuilding timelines.
The non-profit urged lawmakers to add guardrails so that forbearance programs don't unintentionally trap homeowners in deeper financial trouble.
The hearing underscored that wildfire recovery is not just a natural-disaster issue; it's a housing stability and financial-system problem. The California MBA argued that wildfires create a chain reaction across housing, insurance and financial security. This is without coordinated, long-term planning, temporary relief measures risk failing the very people it aims to protect and California has an opportunity to set a national standard for disaster-response policy by aligning mortgage relief with the realities of rebuilding.
Source: GlobeSt/ALM