California Emergency Mortgage Relief Act.

Plain English Breakdown

The official source material does not specify that both borrowers and government officials can bring civil actions; it only mentions borrowers.

California Emergency Mortgage Relief Act

The California Emergency Mortgage Relief Act allows homeowners to request mortgage payment relief if their home becomes uninhabitable due to an emergency, and it sets rules for how long the relief can last.

What This Bill Does

• Allows people who live in homes that become unsafe because of a declared emergency to ask for help with their mortgage payments.
• Requires lenders to offer up to 180 days of payment relief initially, which can be extended by another 90 days if needed, making the total possible relief period up to one year.
• Forbids lenders from charging late fees or higher interest rates during this time.
• Tells lenders they must report mortgage payments as current or delinquent but not indicate that the borrower is in forbearance on their credit reports.

Who It Names or Affects

• Homeowners whose homes become uninhabitable due to an emergency declared by the Governor or federal government.
• Lenders who provide mortgage loans on residential properties.

Terms To Know

Forbearance

A period during which a lender allows a borrower to delay making payments on their loan, often due to financial hardship.

Emergency

A situation declared by the Governor or federal government that requires immediate action and can make homes uninhabitable.

Limits and Unknowns

• The bill does not specify what happens if a home becomes uninhabitable due to an emergency but was already in forbearance before the new rules were put into place.
• It is unclear how lenders will determine whether a home truly became uninhabitable because of an emergency.

Official Summary Text

AB 1842, as amended, Harabedian.
California Emergency Mortgage Relief Act.
Existing law authorizes a borrower who is experiencing financial hardship that prevents the borrower from making timely payments on a specified residential mortgage loan due directly to a specified state of emergency proclaimed by the Governor, or a specified federally declared disaster, to request forbearance on their residential mortgage loan, as prescribed. Existing law requires a mortgage servicer, except as specified, to offer mortgage payment forbearance for an initial 90-day period that may be extended up to a maximum forbearance period of 12 months and prohibits a mortgage servicer from assessing any late fees to the borrower’s account or charging a default rate of interest during the forbearance period.
This bill would, among other things, similarly authorize a borrower to request forbearance on a residential mortgage loan, as
defined, secured by residential real property that has become uninhabitable as a direct result of an emergency, as specified. The bill would require the borrower to affirm that as a direct result of an emergency, a residential unit is uninhabitable. Because the bill would expand the crime of perjury, the bill would impose a state-mandated local program.
This bill would, except as specified, require a mortgage servicer to offer mortgage payment forbearance of a period of up to an initial 180 days, to be extended at the request of the borrower in 90-day increments, up to a maximum forbearance period of 12 months. The bill would provide that the forbearance period includes any period of forbearance related to the emergency that a mortgage servicer has provided to a borrower before the
effective date of these provisions.
date upon which a declaration of a state of emergency was issued by the Governor or the federal government.
The bill would also prohibit a mortgage servicer from assessing any late fees to the borrower’s account or charging a default rate of interest during the forbearance period.
This bill would require a mortgage servicer to report the credit obligations of borrowers under an emergency-related forbearance plan in compliance with the federal Fair Credit Reporting Act. For accounts granted emergency-related mortgage payment relief, the bill would prohibit mortgage servicers from furnishing information during the forbearance period indicating that the payments are in forbearance and would require them to report the credit obligation or account as current or delinquent, as specified.
This bill would authorize a
borrower to bring a certain
civil action to enforce these
provisions.
provisions to be brought by the Attorney General, a district attorney, or a county counsel.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.

Current Bill Text

Download Bill PDF