From Relief To Rebuilding: Rethinking Forbearance In An Era Of Climate Disruption

California’s recent wildfires created immediate displacement, financial hardship and profound uncertainty for thousands of homeowners.

But this is not just a California story.

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 California, we are working through what fair, feasible and durable wildfire-related forbearance should look like. The lessons emerging here extend well beyond our state’s borders.

What we’ve done so far

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.

California MBA worked closely with the Legislature to help shape AB 238 (Harabedian), which provided eligible borrowers up to 12 months of mortgage forbearance. The intent was clear: give homeowners the space necessary to recover without the added pressure of immediate mortgage payments.

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. The goal was balance: meaningful borrower relief that lenders could implement responsibly and consistently.

As recovery transitions from emergency stabilization to rebuilding, the policy conversation is evolving again.

The next phase: rebuilding reality

Rebuilding timelines are stretching further than anyone initially anticipated. Labor shortages, supply chain disruptions and insurance gaps are creating prolonged uncertainty for homeowners who want to rebuild but face financial and logistical barriers.

In response, policymakers — including Governor Gavin Newsom — are exploring extended forbearance options beyond the original 12-month window.

For California MBA and our members, the priorities remain clear:

• Keep families in their homes whenever possible
• Provide relief options that align with regulatory and investor requirements
• Support realistic pathways to rebuilding

The Governor has announced efforts to pursue a state-backed Rebuilding Finance Fund designed to integrate with private lender offerings. The objective is to help bridge the gap between insurance proceeds and total reconstruction costs — a gap that is often the primary reason rebuilding stalls.

This kind of public-private coordination is essential. Forbearance alone does not rebuild homes. It buys time. What homeowners ultimately need is a viable financial pathway forward.

Within our membership, lenders are actively developing construction-to-permanent loan options and other tailored products designed to meet the different financial profiles of wildfire-impacted homeowners. At the same time, we are exploring technology solutions — including a centralized online portal — to streamline communication between borrowers, servicers and state support programs.

It needs to be easier. More coordinated. More transparent.

Relief without structure leads to delay. Structure creates forward momentum.

At California MBA, we believe the productive path forward lies at the intersection of policy and purpose. We support both the mortgage housing industry and the consumers who rely on it. That means moving beyond reactive measures toward scalable, repeatable solutions.

Our hope is that the model emerging in California can serve not only wildfire victims today, but also future natural disaster responses — in California and potentially nationwide.

Eyes on California

California’s approach to wildfire forbearance and rebuilding finance is being closely watched by other wildfire- and hurricane-prone states, federal policymakers, regulatory agencies and housing market investors.

The stakes are significant.

Policy decisions made in response to climate-driven disasters will shape the broader real estate finance landscape. Extended forbearance frameworks, rebuilding finance programs and public-private coordination models could influence how future disasters are managed across the country.

The challenge is ensuring these policies balance three essential priorities:

• Borrower relief
• Operational feasibility
• Long-term housing market stability

If relief measures become disconnected from rebuilding pathways, we risk prolonging uncertainty. If operational realities are ignored, we risk implementation breakdowns. And if long-term market stability is not considered, the cost of capital and access to credit may be affected for years to come.

This moment requires collaboration, not confrontation.

Mortgage lenders and servicers are not bystanders in this conversation. We are implementers. We are risk managers. We are community stakeholders. And increasingly, we must be policy partners.

The future of disaster response in housing finance will not be shaped by emergency declarations alone. It will be shaped by the systems we build now — systems that allow families to recover, lenders to operate responsibly and markets to remain stable.

Relief matters. But rebuilding — and doing it right — matters more.

Paul Gigliotti is the CEO of California MBA.
This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners. To contact the editor responsible for this piece: zeb@hwmedia.com.