California passed a bill enacting the Mortgage Forbearance Act (MFA). The MFA was enacted to allow a borrower to request forbearance on the borrower’s residential mortgage loan who is experiencing financial hardship directly due to the wildfire disaster related to the Eaton Wildfire, the Palisades Fire, and the Straight-line Winds (described in the proclamation of a state of emergency issued by Governor Gavin Newsom on January 7, 2025, or the federally declared disaster, declared on January 8, 2025). Key provisions of the MFA include:
- A limitation to eligibility for the forbearance to a loan that is secured by residential real property improved by 4 or fewer residential units;
- A requirement the borrower affirm they are experiencing a financial hardship due to the wildfire disaster;
- A requirement that a mortgage servicer offer mortgage payment forbearance of a period of up to an initial 90 days, which must be extended at the request of the borrower in 90-day increments, up to a maximum forbearance period of 12 months;
- A prohibition for a mortgage servicer to assess any late fees to the borrower’s account or charging a default rate of interest during the forbearance period; and
- A prohibition for a mortgage servicer to initiate any judicial or nonjudicial foreclosure process, moving for a foreclosure judgment or order of sale, or executing a foreclosure-related eviction or foreclosure during the period of forbearance.
The bill went into effect September 22, 2025.
Click to view the California AB-238: https://www.tenaco.com/wp-content/uploads/2025/10/CA-AB-238-09-23-25.pdf
