The California Mortgage Bankers Association (CMBA) testified on March 20 before the California Assembly Banking & Finance Committee during an oversight hearing on California Assembly Bill 238, which focuses on the effectiveness of mortgage forbearance and the broader challenges facing homeowners affected by the state’s January 2025 wildfires.
AB 238 provides up to one year of mortgage forbearance for homeowners facing financial hardship from California wildfires, specifically those affected by the January 2025 disasters. It allows borrowers to pause or reduce payments in 90-day increments.
The Eaton Fire in Altadena and the Palisades Fire in Pacific Palisades ravaged 59 square miles, displacing several thousand residents and killing an estimated 440 people. Many are still without homes and are facing difficulty with recovery.
During the hearing, lawmakers heard from families dealing with displacement, insurance delays and the lengthy process of rebuilding homes, which can stretch over several years. CMBA said mortgage lenders and servicers play a key role in delivering immediate relief and longer-term support to borrowers following disasters.
“Natural disasters don’t create one problem — they create a chain reaction across housing, insurance and financial stability,” said Paul Gigliotti, CEO of CMBA. “We showed up on Friday to support both our industry and the homeowners we serve, and to reinforce that recovery requires more than short-term relief — it requires real coordination and execution.”
In an interview with HousingWire, Gigliotti said that the state needs guardrails around what forbearance looks like. “Unfortunately, at the committee hearing, we heard largely from the public that not much has been accomplished,” he said.
Testimony from the association said mortgage forbearance offers critical short-term assistance but is not a long-term solution. Extending forbearance without a defined path forward could increase financial strain on borrowers over time, the group said.
“Forbearance is a bridge — but we have to be just as focused on what comes next,” Gigliotti added. “We are ready to work alongside Assemblymembers and stakeholders to build scalable solutions that address the full recovery process — not just lending, but insurance, permitting, and housing stability. If we get this right, California has the opportunity to lead the nation in how we respond to natural disasters.”
Gigliotti said that he’d like to see a more collaborative effort happen.
“I think that AB 238 was an initial reaction to get something in place to support the wildfire victims. I would hope that if any of the additional laws that are on the table, if they get passed or they get looked at, I would hope that it’s in a much more collaborative manner with the industries that are all part of this massive rebuild effort,” Gigliotti said.
The association also pointed to a range of interconnected recovery challenges beyond mortgage relief — including insurance claim delays and coverage gaps, permitting and rebuilding timelines, limited temporary housing and rising rents, and communication gaps among stakeholders.
“Unfortunately, due to other circumstances, a lot of those wildfire victims, as we heard on Friday, still don’t know what the next steps are,” Gigliotti said. “Counties still haven’t opened up areas for the wildfire victims to be able to walk to their homes, let alone get plans or an architect to potentially rebuild, and even if they did, county offices are so backed up with permits that not that many permits have been issued.”
But it’s not just the victims that Gigliotti and CMBA are worried about.
“While the payments are not being paid on forbearance, it is important to remember that the lender is paying that. It’s not free money. Some of our lender members, if one of those bills came to fruition, that’s a lot of money they’re having to pay out to servicers on behalf of that.”
The CMBA called for a more coordinated approach to disaster recovery policy that includes state officials, insurers, housing stakeholders and the mortgage industry. “I think that would be a very interesting opportunity for the state of California to put its best foot forward,” Gigliotti said.
