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New California law gives LA-area fire victims up to a year of mortgage relief
Damaged homes from the Eaton Fire on Navarro Avenue in Altadena.
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LAist
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Topline:
Some homeowners affected by the fires in Los Angeles County will have more time — up to a year — to pay their mortgages under a new law signed Monday by Gov. Gavin Newsom. The law went into effect immediately.
What does the act do? The Mortgage Forbearance Act is for owners of residential properties up to four units who face financial hardship because of the Palisades and Eaton fires. The law bars lenders from charging late fees, imposing higher interest rates and foreclosing on properties during the forbearance period.
To get started, homeowners have to ask lenders for an initial 90 days of forbearance, which can be extended in 90-day increments. Shortly after the fires ignited in January, the state offered some mortgage relief to affected homeowners and announced that more than 400 lenders had committed to a three-month forbearance period. The new law extends that period.
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New California law gives LA-area fire victims up to a year of mortgage relief
How could this impact me? The act prohibits lenders from reporting the pause in payments to credit bureaus, which can hurt scores. When the forbearance term ends, homeowners will still be on the hook for the amount covered. If the loan is current, lenders can’t require a lump sum payment at the end of the forbearance term.
What if I’m denied? Lenders are required to explain why they denied mortgage payment relief to a homeowner. If the request was denied because of errors or missing information in the application, the lender must provide time to fix them.
For any problems with your lender, contact California’s financial protection and innovation department.
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