From relief to rebuilding: Rethinking forbearance in an era of climate disruption

"Across the country, lenders and servicers are navigating an era defined by increasing climate-related disasters, insurance market volatility, extended rebuilding timelines driven by labor and material shortages, and growing pressure from policymakers to mandate borrower relief measures."

"In the immediate aftermath of the fires, mortgage bankers worked quickly alongside state leaders to ensure borrowers had access to forbearance options. Families needed breathing room—time to secure temporary housing, file insurance claims and stabilize their lives."

"But policy must be more than well-intentioned—it must also be operationally workable. Throughout the legislative process, we collaborated with lawmakers and regulators to ensure the relief framework aligned with federal servicing requirements, investor guidelines and compliance realities."

California's recent wildfires displaced thousands of homeowners, creating financial hardship and uncertainty that extends beyond state borders. Lenders and servicers nationwide face challenges from increasing climate-related disasters, insurance market volatility, extended rebuilding timelines, and pressure for borrower relief mandates. California MBA collaborated with state legislators to shape AB 238, providing eligible borrowers up to 12 months of mortgage forbearance. The policy balanced meaningful borrower relief with operational feasibility, aligning with federal servicing requirements and investor guidelines. As recovery transitions from emergency stabilization to rebuilding, prolonged timelines caused by labor shortages, supply chain disruptions, and insurance gaps create ongoing uncertainty for homeowners seeking to rebuild.

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