Emergency Mortgage Relief Act Proposed to Allow Forbearances

 Assembly Bill 1842 (Harabedian) would enact the California Emergency Mortgage Relief Act.  The bill would authorize a borrower to request forbearance on a residential mortgage loan that has become uninhabitable as a direct result of conditions resulting from an event that was the subject of a proclaimed state of emergency issued by the Governor or by the federal government.  ​

Borrowers would have to affirm a residential unit is uninhabitable as a direct result of an emergency, after which a mortgage servicer would then be required to offer mortgage payment forbearance of a period of up to an initial 180 days, to be extended at the request of the borrower in 90-day increments, up to a maximum forbearance period of 12 months. The mortgage servicer could not assess any late fees to the borrower’s account or charge a default rate of interest during the forbearance period.  For accounts granted emergency-related mortgage payment relief, the bill would prohibit mortgage servicers from furnishing information during the forbearance period indicating that the payments are in forbearance and would require them to report the credit obligation or account as current or delinquent. The bill maintains the validity of trustee’s sales and sales to bona fide purchasers in the event of a failure to comply with its provisions.