Mortgage Forbearance Act Signed into Law; Goes into Effect Immediately

Governor Newsom has signed AB 238 (Harabedian), entitled the Mortgage Forbearance Act, into law. The legislation went into effect immediately upon signing as an urgency measure.​

Assembly Bill 238 enacts a number of changes relating to California’s foreclosure laws for eligible homeowners whose properties were destroyed or left uninhabitable by the L.A. wildfires earlier this year. Specifically, the law provides those eligible homeowners with an initial forbearance period of 90 days, with the option to extend for up to a maximum of 12 months in 90-day increments. The forbearance period required by the law includes any period of forbearance related to the wildfire disaster that a mortgage servicer has already provided to a borrower prior to the effective date of the law.
 
The law also enacts a number of obligations for mortgage servicers, including that they respond within a specified time to forbearance requests, provide explanations for a denial of forbearance as well as an opportunity for a borrower to cure and resubmit forbearance applications, and notify borrowers of requirements relating to forbearance extensions.
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CLTA worked with stakeholders early in the legislative session to ensure that non-compliance with the law’s requirements would not affect the validity of a trustee’s sale or a sale to a bona fide purchaser for value.