Mayor Bass asks banks to offer additional three years of mortgage relief to fire survivors

California law requires banks to let homeowners delay their mortgage payments for up to one year as they recover from the January fires. But that period rapidly is coming to a close, and Los Angeles Mayor Karen Bass says the timeline should be much longer.

On Tuesday, Bass asked mortgage companies to voluntarily extend relief for another three years, which would bring the total forbearance period to four years after the Palisades and Eaton fires destroyed thousands of homes.

“Many impacted residents remain in temporary housing and face mounting financial strain,” Bass said in a news release. “They're piecing life together while having to negotiate with contractors and wait for insurance claims to come through.

"Asking them to shoulder mortgage payments on top of all that would force them into an impossible — and unacceptable — choice.”

How mortgage relief currently works

Under Assembly Bill 238, signed into law by Gov. Gavin Newsom in September, homeowners affected by the Palisades or Eaton fires can request mortgage forbearance for up to 12 months. The law extended a previous 90-day forbearance period that banks agreed to honor after the fires.

Bass’ office said she wants the banks to agree to let homeowners take another three years of deferred payments and put them on the back end of their mortgage.

The mayor also is requesting that banks refrain from charging fees or penalties and leave mortgage holders’ credit scores unaffected by the extended relief period.

‘This is not like a free lunch’

Richard Green, director of the USC Lusk Center for Real Estate, said he’s not sure Bass will convince banks to agree to these terms. And he said homeowners would need to closely scrutinize any relief plan.

Depending on the details around interest payments, he said, some homeowners could exit the forbearance period owing more on their mortgage than their property is worth.

“Consumers would have to understand that this is not like a free lunch,” Green said.

He compared Bass’ proposal to President Donald Trump’s recent suggestion about creating a 50-year mortgage to address nationwide housing affordability concerns. Both plans adjust financing terms without tackling the fundamental reason housing costs so much, he said.

“It's not a great deal,” Green said. “We need to be able to build more housing faster, whether it's in the aftermath of a disaster or not.”

Temporary relocation money is running out

Last month, a nonprofit group called Department of Angels released a survey of thousands of fire survivors that found about 80% of residents displaced by the Eaton Fire and about 90% of those displaced by the Palisades Fire still have not returned to their previous homes.

Many now are paying rent for temporary housing in addition to their regular mortgage payment. The survey found that within the next year, 23% of Altadena residents and 29% of Pacific Palisades residents will run out of insurance payments that cover the cost of that new rent.