Delivering meaningful wildfire mortgage relief shows why partnerships matter

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OPINION — California lawmakers are called upon to act quickly after disaster strikes. But urgency does not make the details of legislation any less important. When families have lost homes, been displaced and face years of rebuilding, relief must be both meaningful and feasible in implementation.

We applaud Gov. Gavin Newsom for signing two mortgage forbearance measures, Assembly Bill 1842 and Assembly Bill 1847. These measures are examples of what can happen when lawmakers and stakeholders stay engaged and work collaboratively through difficult policy questions.

California’s banking industry proactively deployed wildfire relief and supported recovery efforts from the beginning. In the immediate aftermath of the Los Angeles fires in 2025, banks worked directly with affected customers to provide relief, while the California Bankers Association (CBA) remained actively engaged with policymakers in crafting legislative solutions that address the financial challenges facing wildfire survivors.

CBA worked with lawmakers on Assembly Bill 238 last year, which established mortgage forbearance protections for borrowers experiencing financial hardship because of the Eaton and Palisades fires. AB 238 gives qualifying homeowners temporary relief from mortgage payments.

This year, lawmakers sought to build on that work through AB 1842 and AB 1847. We shared the goal of helping homeowners continue their recovery, but several provisions in the original bills created real problems if put into practice.

One reason is that a mortgage servicer collecting a homeowner’s mortgage payment often does not actually own the loan. It may be managing the loan on behalf of another investor, in many cases a federal government agency. Those arrangements come with rules that determine what kind of payment relief can be offered and for how long. State requirements should account for those rules if the relief is going to work as intended.

AB 1842 is a prime example of how productive engagement by all parties can improve legislation. Earlier versions were overly broad and applied to investment properties, unnecessarily increased legal exposure for mortgage servicers, and imposed burdensome new reporting requirements that would have distracted attention away from providing relief. 

CBA worked throughout the legislative process to address these concerns. The final bill applies to properties with four or fewer residential units, strikes a more reasonable balance on who can bring civil actions against mortgage servicers, and is triggered by a federally declared disaster. It also accounts for federal mortgage servicing requirements and existing loan contracts.

AB 1847 presented a different challenge. As introduced, the bill proposed extending wildfire-related mortgage forbearance from 12 months to as long as 36 months. While we understood the rebuilding process was likely to be prolonged due to a variety of factors, we believed a three-year requirement would be rejected by investors, placing mortgage servicers in conflict.

Again, negotiations produced a more workable result. The final bill provides for up to 24 months of total forbearance. Borrowers must confirm that they are experiencing financial hardship and that their property remains uninhabitable because of the wildfire. 

As a result of these amendments, CBA removed its opposition to both measures.

This outcome demonstrates what effective policymaking can look like. Protecting consumers and maintaining a healthy mortgage market do not have to be competing goals. Wildfire survivors need real assistance that gives them time to recover and rebuild. At the same time, the rules governing that assistance must reflect how home loans actually work.

Too often, stakeholders are viewed simply as being “for” or “against” a bill. That misses much of what happens in the legislative process. Sometimes the most valuable role an organization can play is identifying where a well-intentioned proposal may fail in practice and staying at the table to help fix it. We thank Gov. Newsom and Assemblymember Harabedian for working with stakeholders to develop meaningful relief.

California will face another major wildfire, earthquake, or natural disaster. When that happens, policymakers will again need to act quickly, and we will be there ready to assist.

The experience with AB 1842 and AB 1847 provides a useful roadmap: Start with the people who need help, understand how the system responsible for delivering that help actually works and be willing to amend legislation when legitimate problems are identified.

That is how good intentions become workable policy.

Kevin Gould is president and CEO of the California Bankers Association (CBA).