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.
AB 238 creates the Mortgage Forbearance Act, a new set of Civil Code provisions aimed at homeowners affected by the January 2025 wildfire disaster tied to the Eaton Fire, the Palisades Fire, and the straight-line winds. It allows eligible borrowers with residential mortgage loans secured by one to four residential units to request mortgage forbearance if they can affirm financial hardship caused directly by the disaster. Requests must be made to the mortgage servicer within a specified window, and servicers must respond within 10 business days.
The bill requires servicers to offer an initial 90-day forbearance, extendable in 90-day increments up to 12 months total. During forbearance, servicers may not charge late fees or default interest, may not start or continue foreclosure actions or foreclosure-related evictions, and must provide notice about repayment obligations and any additional documentation needed for extensions. The bill also addresses credit reporting by directing servicers to follow federal Fair Credit Reporting Act requirements and generally not report the account as being in forbearance during the relief period, while preserving current or delinquent status as appropriate.
AB 238 also includes consumer-protection and administration provisions. It requires servicers to explain denials with specific investor or contractual reasons, gives borrowers 21 days to cure certain defects in incomplete requests, and requires advance notice before the end of an initial forbearance period. The Department of Financial Protection and Innovation must post guidance links, a summary of Fannie Mae and Freddie Mac disaster-forbearance guidance, and a dedicated assistance phone number. The bill applies to depository institutions and licensed mortgage servicers, but not trustees acting under a deed of trust power of sale.
The bill’s impact on state law is to add a new wildfire-specific mortgage relief framework in the Civil Code, layered on top of existing federal and investor servicing rules. It also declares an urgency statute, making it effective immediately, and states that no state reimbursement is required for local agencies or school districts. The measure is narrowly tailored to disaster-related mortgage servicing and includes conflict-of-law protections where compliance would be impossible under applicable federal or investor guidelines.
The overall sentiment around AB 238 appears strongly supportive and noncontroversial. The voting history shows unanimous or near-unanimous approval at each stage, including 6-0, 11-0, 13-0, 70-0, 7-0, 12-0, 7-0, 40-0, and 77-0 votes. No committee transcript opposition is provided, and the urgency clause suggests broad legislative agreement that immediate borrower relief was needed after the wildfire disaster.
AB 238 adds Title 19.1 to the Civil Code, establishing a new statutory mortgage forbearance program for wildfire-affected borrowers and imposing duties on mortgage servicers regarding application processing, repayment disclosures, credit reporting, and foreclosure moratoriums. It affects residential mortgage loans secured by properties with four or fewer units and applies to covered lenders and servicers, while carving out trustees acting under a deed of trust. The bill also creates a limited state-mandated local program finding tied to the perjury-related affirmation requirement, but states that no reimbursement is required.
The bill’s legislative history indicates overwhelming support. Every recorded vote was unanimous, and the measure advanced smoothly through committee and floor votes in both houses. The urgency clause and immediate-effect language reflect a shared view that wildfire-related housing and financial distress required prompt statutory relief.
No major opposition is evident in the available record. The main policy tensions built into the bill are structural rather than partisan: it balances borrower relief against investor and federal servicing constraints, limits eligibility to certain residential loans and disaster-related hardship, and preserves compliance exceptions where state requirements would conflict with federal or investor guidelines. The bill also requires borrowers to affirm hardship, which is why the digest notes a perjury-related state-mandated local program, but no recorded dispute over that issue appears in the provided materials.