Gov. Gavin Newsom on Wednesday proposed a multimillion-dollar mortgage relief package for victims of recent natural disasters, including the fires that swept through Los Angeles County last month.
Under the plan, which must be approved by a state board, more than $100 million would be available in direct relief for people at risk of foreclosure. Another $25 million would help fund mortgage counseling and help people navigate disaster assistance.
The relief package would be funded by a mortgage settlement reached by then-California Atty. Gen. Kamala Harris with big lenders in the wake of the Great Recession, and not from the state budget, according to Newsom’s office. The California Housing Finance Agency oversees those funds and its board is scheduled to debate the proposal Thursday.
Such money could be critical for many in L.A. County. Last month’s fires destroyed or seriously damaged more than 12,000 homes, but didn’t wipe away the obligation homeowners have to pay their mortgages.
As a result, many people are on the hook for not just a mortgage on a destroyed home, but also rent for temporary housing. Insurance payments can help cover such costs, but there’s concern payouts won’t be enough, particularly for people who were underinsured.
Mortgage relief wouldn’t be limited to just the Los Angeles fires. To qualify, homeowners would have to have their property destroyed or substantially damaged by a declared emergency since Jan. 1, 2023.
“As survivors heal from the trauma of recent disasters, the threat of foreclosure should be the last thing on their minds,” Newsom said in a statement. “This disaster mortgage relief program would help lift this burden and give families more time to focus on recovery.”
In the meantime, some temporary help is available.
Newsom previously announced agreements with several big banks and hundreds of state-chartered lenders to provide a streamlined process for fire victims to receive a 90-day pause on their mortgage payments.
A bill submitted in the state Legislature would also enable people with a fire-related financial hardship to delay up to a year’s worth of mortgage payments.
