California Governor Signs Bill Offering Mortgage Relief to January 7 Fire Victims
California Governor Gavin Newsom has signed Assembly Bill 238, which provides up to a year of mortgage relief to victims of the January 7 fire storms. The legislation, which took effect immediately, allows borrowers to pause their mortgage payments for up to 12 months without incurring late fees or penalties. To qualify, borrowers must attest that the fires caused a financial hardship, without requiring documentation.
The relief is offered in 90-day increments and can be extended at the property owner’s request. The law also prohibits mortgage servicers from initiating a foreclosure or executing a foreclosure judgment or sale during the relief period. Governor Newsom stated, “Homeowners rebuilding after a disaster need all the support they can get, including grace in light of this incredible hardship.” He also expressed his intention to continue working with lenders to support survivors in the coming months.
Key Provisions of the Bill
The bill, co-sponsored by Assemblymembers John Harabedian and Jacqui Irwin, provides more generous relief than a voluntary forbearance program introduced by Governor Newsom and Assemblymember Harabedian in January. The program offered 90 days of relief from payments, without accruing late fees or damaging credit scores, and protected homeowners from new foreclosure or eviction actions for at least 60 days. Over 400 financial institutions participated in the program, and any relief provided under this program will be credited towards the 12-month extension limit established by AB 238.
Assemblymember Harabedian noted that many survivors have been forced to make two housing payments: one for their temporary rental accommodations and another mortgage payment for a house that is uninhabitable or no longer exists due to the fires. He emphasized that AB 238 will ease the financial burden faced by these families. The bill was amended to make it more consumer-friendly, including a prohibition on mortgage services from affecting the credit of borrowers who use the program.
Impact on Fire Victims and Reconstruction Efforts
It has been over eight months since the fires in Pacific Palisades, Altadena, and nearby communities damaged or destroyed over 16,000 structures. Despite the passage of time, reconstruction is only just beginning, and many insurance claims remain open. Claims for smoke damage have been particularly problematic, leading to multiple lawsuits against insurers and the California FAIR Plan Association. A survey conducted by the Department of Angels in June found that only one in four fire victims had their insurance claims fully approved.
Joy Chen, executive director of the Eaton Fire Survivors Network, welcomed the legislation, stating that it will help thousands of homeowners struggling to fix or rebuild their homes. She noted that the mortgage relief will provide much-needed stabilization, especially for those facing difficulties in accessing temporary housing payments from their insurance. Chen emphasized that being a survivor is a full-time job and that many people are feeling despair.
Related Legislation and Federal Support
AB 238 fared better in the Democratic-controlled Legislature than similar mortgage-relief legislation proposed by legislators Sen. Adam Schiff and Rep. Judy Chu. However, Chu’s bipartisan Filing Relief For Natural Disasters Act was signed into law by President Trump in July, authorizing the Treasury Department and Internal Revenue Service to extend federal tax filing deadlines for individuals living in state-declared disaster zones.
Other wildfire-related bills are currently awaiting Governor Newsom’s signature, including Senate Bill 495, which would require insurance companies to pay 60% of fire victims’ personal property coverage after a declared disaster. There are also bills aimed at assisting homeowners who take steps to reduce fire risks on their property and a package seeking to reform and strengthen the FAIR Plan.
For more information on the bill and its impact on January 7 fire victims, visit Here
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