CALIFORNIA ASSEMBLY BILL 238
Mortgage Forbearance Related to Wildfires
What is Assembly Bill 238? California Assembly Bill 238 was enacted as an urgency statute in September 2025, introduces important mortgage relief measures for homeowners financially affected by California wildfires. AB 238 applies to homeowners experiencing financial hardship directly caused by a wildfire disaster that triggers a state of emergency (such as those declared on January7–8,2025, covering the Eaton Wildfire, Palisades Fire, and Straight-line Winds). Eligible loans include residential mortgages secured by properties of one to four units, and both federally (e.g., FHA, VA, Fannie Mae, Freddie Mac) and non ‑ federally ‑ backed loans are covered. Borrowers may request forbearance by simply attesting—under penalty of perjury—that they are facing financial hardship due to the wildfire. No additional documentation is required. Servicers must grant an initial 90-day forbearance (rather than 180, as earlier drafts indicated), renewable in 90 ‑ day increments, up to a total of 12 months. Any pre-existing wildfire-related forbearance counts toward that 12-month limit. Once a borrower submits their attestation, servicers are required to approve or deny the request within 10 business days. If denied due to investor restrictions, servicers must provide a specific denial reason and offer a 21-day cure period for borrowers to address defects.
Protections During Forbearance No late fees or default interest may be charged during the relief period.
Servicers must report the loan to credit bureaus as either current or reflecting prior delinquency in compliance with the Fair Credit Reporting Act, but must not flag the account as being in forbearance. Foreclosure proceedings—including initiation of nonjudicial or judicial foreclosure, eviction, or foreclosure sale—are prohibited during the forbearance term. Why it matters AB 238 provides a streamlined, borrow-friendly pathway for wildfire-impacted homeowners to pause mortgage payments for up to a year, debt-free, penalty-free, and foreclosure-free, while maintaining credit standing and receiving timely, clear decisions from mortgage servicers.
https://www.clta.org/uploads/1/5/2/2/152207072/2025_summary.pdf As shown on page 9-10 of the 2025 CLTA Summary of Legislation
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Find more important Assembly Bill 238 details here: https://legiscan.com/CA/text/AB238/id/3176534
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