Assembly Standing Committee on Banking and Finance

Good morning. Buenos Dias. We will now call to order the assembly committee hearing of banking and finance outcomes review of AB 230 a. And before we get started, I'd like to ask, the president of the Pasadena City College board of trustees, mister Steven Gibson, to give us a welcome. And thank you for hosting us today.

My name is Steve Gibson. I'm a longtime resident of Altadena. I wanna start by thanking assembly member, Harabedian, the coauthors, and everyone who made AB 38 possible. Your leadership during one of the hardest disasters our community has ever faced has meant the world to us. And thank you, Assemblymember Avelino, Valencia, for host for moderating today.

I lost my home in the wildfires that tore through our community. I can tell you the financial burden hit just as hard as the fires. Many of my neighbors have called Altadena home for generations. And the financial burdens after the fire were overwhelming and threatened to drive many out of the community that they helped build. That's why ab 238 is so important.

Ab 238 gave homeowners a fighting chance in the wake of the disaster. No family deserves to have to think about whether they should pay mortgage or whether they can keep their family together or whether they have to move. By lifting this burden, the law allows people in our community a breathing space, a chance to gather their resources and decide on rebuilding. The important thing for many of us is recovery, rebuilding, and the choice of remaining in Altadena. We're a resilient community.

AB 238 gave us the chance to prove that. On behalf of my neighbors, I wanna thank you for seeing the problem, acting on it, and making a law that could do it. Your dedication to the people of Altadena and Pasadena gives us joy, pride, and we appreciate it from the bottom of our hearts. Thank you so much.

Thank you, president Gibson. Would like to start by giving some brief remarks and share some of the work that the committee, and I myself as chair have done in collaboration with Assemblymember Harabedian on this extremely important and critical topic. In recent years, California has not only seen an increase in frequency of natural disasters, but an increase in the magnitude of devastation.

Immediately following the outset of last year's firestorms, I, with Assemblymember Harabedian and key stakeholders, worked diligently to find a path to stem foreseeable financial bleeding for the survivors. In my role as chair of the committee, I grapple with the complications of asking institutions that provide much of the financial scaffolding to our communities and infrastructure to change their systems and adjust financial risk without a longer runway.

But I know in my heart that the displacement, loss, and emotional damage suffered by families from these disasters is incomparable to the work that we have to grapple with. Assembly member Harry Beating and I, along with important stakeholders, have never stopped discussing how we can continue to support survivors and Californians across the state.

The purpose of today's hearing is to hear from you directly, the survivors, the residents and people who have been through it, who are still going through it, and who have to live with the outcomes of our laws on a day to day basis. Your testimony is not merely anecdotal. It is the essential empirical evidence we need to inform and shape future legislative and policy decisions.

It will guide us as we work to identify systemic failings and more importantly, to design and implement concrete actionable improvements to California's disaster financial recovery framework. Before we begin, I want to thank all attendees today. The survivors in particular who have bravely come forward to share their personal struggles. The members of the financial community and my colleagues on the committee and in the state assembly. I'd also like to be clear about today's objective.

The goal is not to assign blame. This is not a session for finger pointing. Our collective focus must be on constructive engagement, transparent dialogue, and that's including the financial industry, and the shared responsibility of identifying areas to for immediate and long term success and improvement in our systems. We are here to listen, learn, and ultimately ensure that our recovery systems serve those they are intended to protect, the people of California.

With that, I'd like to hand over the mic to Assemblymember Harabedian to provide some remarks as well. Thank you.

Thank you, mister chair. I appreciate it. And, thank you for everyone for being here. And first, just wanna thank PCC for hosting us, President Gibson for your remarks.

And, Speaker Rivas, who allowed us to do this here, but really want to give a shout out to Chair Valencia, my good friend, who, who really was one of the unsung heroes in delivering for fire survivors last year when we, were able to craft AB two thirty eight and AB four ninety three, which provided payout interest on insurance payouts.

That was really because of his leadership and the banking and finance committee and and all of his staff who are here today and and made this hearing possible. With his leadership, it actually got through the committee and was ushered to the governor's desk and was signed and, didn't get a ton of notoriety for that or fanfare, but we really are here today because of his leadership. And, frankly, we're here today on a Friday when he could be in his district, a very beautiful district.

He represents, Disneyland, beautiful Orange County, and it's, a close second to this district in terms of the greatest district in the state. But, Fridays are really sacred for us.

We're in Sacramento Monday to Thursday, and Fridays are are meant for district matters. And he really insisted that we be here with you, the survivors. And so he deserves a big round of applause for everything he's done, and I appreciate I appreciate that. You know, we're gonna get into this, but we know how exhausted fire survivors are. We know how much you're going through, just how much on a day to day basis, you are fighting just for survival.

And, whether it's delayed insurance pay payouts, under insurance, bureaucratic red tape, or dealing with financial institutions on a number of matters, we understand how exhausted you are. And for you to even be here to provide testimony means a lot. To have to relive trauma and tell us about it is not easy. And the scale of the devastation, everyone knows quite well. You've lived it.

You know, we lost 17,000 structures throughout both fires and, you know, $45,000,000,000 in damage. There was also emotional, physical, and mental damage that we're still dealing with. And, fast forward to to where we are today, we we when we saw the thousands of homes we lost, we knew right away that the mortgages were gonna be a problem. Over 70% of the homes had active mortgages on them, to the tune of $11,000,000,000 in total.

And we knew if we were gonna provide some sort of financial relief, we had to start talking about the mortgages.

And what we saw in the data is shown in the month or two after the fire, we saw a precipitous drop in mortgage payments. Anywhere from 16 to 24% of mortgages weren't being paid on time. And, and that's when we went to work. So, Chair Valencia and I realized that we were going to have to figure out how to provide some breathing room, and that's what AB 238 tried to do.

It really is, as President Gibson said, provides breathing room and some semblance of a grace period so that people could put their lives back together.

And the whole point was that we would avoid foreclosures, no no negative credit report reporting, no balloon payments or lump sum payments, and obviously no forced sales. We wanted people to remain in their communities if they could. And AB 230 of 238 theoretically was is and and was supposed to help with that. Theoretical and and and the actuality of bills are two different things, And that's why we're here. Passing a law is hard, but implementing it and making it work is even harder.

And so today is really about accountability. It's about learning. It's about transparency. Is the law working? And if it isn't working, what can we do to make it better?

And what can we do to actually strengthen it for everyone involved? Frankly, I think most of the financial institutions are trying to do the right thing. I think that most of the financial institutions that were at the table with us to broker AB two thirty eight want to see this work because they don't want to see foreclosures either. But this is why we're here.

And I think the testimony will really make sure that we know everything that has gone wrong in the past year trying to implement AB 238 but everything that has also gone right.

And so this is a really learning exercise for us and we appreciate everything, but, you know, we'll just end with, you know, we'll never stop fighting for the survivors. Whether you're here today, whether you're watching, or you're not able to be with us, there's a number of different things that we're doing. It takes a village, and so we really appreciate everyone's collaboration. And, mister chair, thank you very much.

Absolutely. And thank you for those remarks. Assembly member, can't state the importance of this issue. Happy to be here on a Friday. And, you know, not to shed light on the issue, but even though I do represent the happiest place on earth, let's make sure that Pasadena, Altadena, and the surrounding communities that have been so devastated also have that type of happiness brought back to their communities as well.

With that, we will move on to the first portion of today's committee hearing, which will be, in my opinion, what's most important, the present the presentations of our survivors. There are five in person and then three online testimonies. And with that, we will have our in person testimony introductory join us. Thank you.

Morning, everyone. My name is Jonathan Weidman, and I, along with my husband, Raymundo Baltazar, lived on Poppy Fields Drive And I just want to start. Thank you, gentlemen, for your leadership and your support. And it was 01/01/2025. You didn't expect that for over a year, you would be dealing with something of this magnitude.

And I think that you have done an extraordinary job in this legislation, availability and your access and your team has been amazing. And I also extend that to our super and our and our and our and our and our and our and our and our and our and our that my personal loss was substantial. Was a man named and it was a murder of California in the 1950s between, Earl Warren and Pat Brown. I am the family historian and lost irreplaceable California history.

The burned in the fire, photographs, correspondence, and a tragic loss for our family.

You mentioned Disney. Yeah. Papa was their opening day with Walt Disney the... The letters, the photographs, all parished. And the and the and the and the and the and the and the and the and the and the and the and the and It's with you. And it has become our second job to draw to rebuild our home and rebuild our lives from this event.

We're pretty lives to a degree, which I think none of us ever imagined. The financial challenges, have been significant. And not just to us personally, but to the community, to businesses, and exponentially throughout the region. I think millions of people have been impacted by this in some random. And So she's lost her business and it goes on and on and on and on and on.

So I want to thank you for your for your efforts. It's a as a form of Wells Fargo for almost thirty years. I was their head of their foundation here in Los Angeles. I am today in health care. I work for VA Care Community Health in Los Angeles.

And if I may say at age 66, it's just in time to be around doctors every day. It's a great organization, a federally qualified health center. But as a former banker, I know having gone through the mortgage Crisis24 barances and forgiveness around loans and

And forgiveness around loans and modifications are not something that are not something that banks like Yeah. To make any money from them. They're complicated. They're time consuming. And, they're difficult.

modifications are not something that banks like to do. And forgiveness around loans and modifications are not something that banks like to do.

We called our mortgage company, loan division of and I'm sad to report that everyone who and not know what I was talking about approval. You have to be approved for a four remember Harabedian your team has been very helpful and trying to get their three or six months off for all of us in paying our mortgages. Would really go a long way to help us right now. Because there's so many unexpected costs. So many unexpected costs.

So many things that come up every day that you have to write a check. And I think that candidly, as a former banker, and who loves the I think a lot of these companies have been and, what you should be able to do is call your mortgage company and say, I lost my home in everything of my life. These fires. And there should be somebody on the other end saying, let me tell you how we can help you. And that has not been our experience.

So my hope is that, this legislation, continues and is strengthened and that the resources and the mechanisms are in place to ensure that everybody who lost their home has a fair chance at rebuilding and certainly supported by their mortgage companies. We have an opportunity right now to restore this community and to restore Altadena and The Palisades and the entire region Like, stand up. I hope that we can do that. I know that we can do that. One of the components of that is Moragius.

It's giving people a leg up, giving people a little extra so that they can rebuild. So thank you very much, for your leadership. And I really, really mean that because this is an easy stuff. You're right. It is complex.

And it's hard work.

And,

good wishes to all my my neighbors and friends. I see some of you out there. We'll get through this. We will. Thank you very much.

Thank you. We will now have mister Michael Bustamante come up to the mic and provide testimony.

I get it. Yeah. Thank you. Thank you, mister chair. Thank you, assembly member Harabedian, you know, for for having this for holding this important hearing.

My name is Michael Bustamante. I live on New York Drive, 1009 New York Drive. On January 7, which happened to be my wife's birthday, we are in Glendale at Carousel Restaurant celebrating her birthday with a number of her friends from the neighborhood. And around 06:45 or so, one by one, they started to get notifications. And, oh my goodness, we need to evacuate.

And I didn't take it very seriously until one of our friends said, oh my god, so and so's house is on fire. Then it was time to call for the check. And so, you know, we we moved to Altadena fourteen years ago. We used to live in Sacramento. And we have we have a house that we love very much.

When we got to the house around 08:00 or 07:30 or so, You could see the fire on, you know, in Eaton Canyon, almost two miles away. Didn't think it was a big deal. My son was who who had just turned 152 days before, was utterly distraught. And famous last words was, Matthew, that's two mile about two miles away. An awful lot would have to happen for it to get from there to here.

Well, not only did it get to here, but then it kept going. I showed up to the house, at 08:00 in the morning, the next day. I had fire on all three sides of me. Two of the three houses to the east, six houses on my fence line to the North, my neighbor's guest house to the West, and many other houses going forward. When I walked into the kitchen, the thing that struck me was several.

One, I couldn't see to the dining room because of the smoke that was in the house. When I looked down onto the to the, you know, to the kitchen floor, it was covered in soot. And in certain places, it was there were puddles of water. We knew that we had a problem.

And as a result, you know, the easy answer is that we we replace the roof, the doors, the windows, the floors, the HVAC system, the backyard, which was on fire, 270 linear feet of fence line gone.

Right after the fire, I didn't know what to do. I mean, my insurance company, I reached out to them. You know, they, they were nice, but reasonably ineffective. Over time, they became far more ineffective. But, you know, I I I read in the newspaper about a forbearance program.

My bank didn't reach out to me, but PNC. But I saw that there were other banks and I thought, you know what, I'm gonna call. And so I did call him. It took me three people to get to the fourth person that said, yes, we have a forbearance program. And then he set about essentially grilling me like as if I was applying for a brand new loan.

You're right. You have to apply. I was accepted. Part of the forbearance program was we can only allow up to six months, which at the time, you know, I thought, well, that's not bad. And at the end of that six month time, you need to pay the entire loan in full.

And I thought, okay. A balloon payment of that magnitude at the end of this, that no. I don't wanna be a part of this. But I went ahead and I I satisfied the requirements and I had the forbearance in my back pocket. I used it twice.

I used it once in March because, you know, I was just crushed with all the things that were going on. And then I used it again in June because I really didn't like the idea of this balloon payment thing. And so, you know, I knew at the August that somehow or another, there would be a payment that would come to me and I would go ahead and pay it.

What I didn't realize was on September 12 to the thirteenth, while I was in a meeting, I looked down at my phone and the credit monitoring that I have on my phone went off because I was just told that I have a thirty day delinquency charged onto my credit. You know, I don't understand what this is.

Well, turns out that PNC had cascading program in effect for payments. So when I didn't make my payment in March intentionally as a part of the program, when I made my payment in April, it applied to March. When I didn't make my payment or when I took advantage of the program in June, you know, it went it went boom, boom, boom. And so essentially, I was at a minimum one month late. And after using the second forbearance, now I became two months late unbeknownst to me.

And so, you know, I think consumers out there are very they are unaware of what is available to them. And, you know, I would just leave you with this. There's plenty of things I could talk about, but I would leave you with this thought. First off, I think you need to take a look at creating, if you will, a consumer bill of rights, which enable consumers to understand what's available to them.

I didn't know until mid to late May that I needed to get a environmental hygienist on board in order for the insurance company to continue processing, you know, my claim.

I didn't know that there was a forbearance program because my bank wasn't willing to come to me. I had to go to them. And there are a whole host of other issues that as consumers, we are unaware of. And and to, you know, to find a way to shed light on this, to provide information to consumers is I think the most important thing that this committee can do.

Now, having said that, I wish February had been in place because it would have been a godsend for me.

But unfortunately, it wasn't. But now it is. And so for folks going forward, there'll be some relief. So I thank the committee for their work. And excuse me.

I would implore you to think about creating some kind of mechanism or vehicle to allow for more information to consumers well in advance of any kind of disaster. Because what we do know is this, you're next. It will be in another community coming soon. Thank you.

Thank you. Next, we have miss Natasha Mandick. Welcome.

So good morning to all of you guys, and it's great to be here. And thank you so much, Chair Garcia and Assembly member Harabedian, for your time and for all your efforts to help our communities. Aye, came from West Hollywood, where we reside now, but, I have a standing house in Pacific Palisades where we lived for sixteen years, my husband and Aye, and our twin daughters. And, our house survived solely because neighbors stayed behind and fought to save it. It's heavily damaged though.

Our garage burned down along with 77 houses within twenty I mean, 250 yards around us, and we had to dispose of all of our possessions that were in the house. Our Christmas tree though is still inside the house from December 2024 just to keep it in perspective and where we are all at in this process that's never ending, fighting mostly our insurance companies.

So our house is, you know, windows melted from extreme heat to roof tiles were compromised across the structure causing ongoing leaks and exposing the home to further damage over the course of the last fifteen months. Soot tar, heavy metals, high levels of lead throughout the house and in our yard is still present.

We are currently living in an apartment in West Hollywood, as I said, with no clear timeline though for returning home due to the extremely prolonged insurance delays, solely due to our insurance insurer's actions or inactions.

To put this in perspective again, you know, we have not moved forward at all and not one step forward making our house habitable or easing our substantial financial burden. Immediately after the fire, as all of us face this, finding housing was is extremely difficult. Rental prices surged overnight. In the first three months, we moved five times. Within, you know, from short term rental to short term rental.

Now settling in this apartment where remain we remain today with, again, no clear timeline when we can move back. Therefore, we sought mortgage forbearance under AB 238 expecting meaningful relief. However, our experience with Bank of America was deeply disappointing and confusing. On multiple initial calls, representatives were not even aware of the bill. This was in December 2025.

It took several days just to reach someone who understood the program, first of all. When we finally did reach that person, we were told something that directly contradicted the intent of the bill. Several things. That we had to undergo an extensive financial qualification process that we would owe a lump sum at the end of the forbearance period, or alternatively, accept a loan modification that would increase our monthly payments. So this is not relief.

This is restructuring of debt under pressure benefiting solely lenders, not the survivors. We expected a model similar to pandemic era forbearance. Payments paused and moved to the end of the loan with original terms preserved and no compounded interest. That is what real relief looks like, and this is how it should like look like for this these two communities. Instead, we were met with confusion, inconsistent information, and terms that would ultimately worsen our financial position.

So at the time, we decided against it. However, we're now facing a severe financial cliff at the moment. Our additional living expense coverage will run out in August. There is no realistic scenario in which our home will be repaired by then. That means we will soon be forced to pay both rent and our mortgage simultaneously, effectively almost tripling our housing costs due to the high cost of the rental.

At the same time, we're in an ongoing dispute with our insurance company. Even under the best outcome, we expect to face a shortfall of approximately $200,000 just to complete necessary repairs on our house. The situation has created constant uncertainty and stress for our family. We're doing everything right and still falling behind. AB 238 was intended to provide relief, but in practice, it is not being implemented in a way that delivers that relief.

The solution is not complicated. We already have a proven model, the pandemic era mortgage forbearance forbearance framework, which gave people stability during crisis without pushing them deeper into financial hardship. Relief should be simple, clear, and consistent. No lump sum payments, no forced loan modifications, no increased monthly obligations, clear and consistent implementation across mortgage servicers. Homeowners recovering from this immense disaster don't have the capacity to fight banks, insurers, city building departments all at once.

We're not asking for special treatment. We're asking for fair chance to rebuild our homes and our lives. And thank you so much for all your help and what you're doing on this issue.

Thank you for your testimony. Next, we have Tim Nayar Vinod. Thank you and welcome.

My best to stick to the four minutes. Good morning. My name is Tim Nayar. I'm a homeowner in Alta Dena. My wife and I had our home taken from us by the Eaton Canyon Fire.

I'm here today to report that US Bank appears to be in direct violation of the California law, specifically AB 238, and I'm asking for the board's help. After the fire, we requested mortgage forbearance as we were entitled to under the law, and US Bank granted that forbearance. But the law requires more than that, and on three specific points, the bank is simply not complying. First, credit reporting.

AB 238, section thirty two seventy three dot 23 I, states that a mortgage servicer shall not report to credit agencies that a borrower is in forbearance.

US Bank sent us letters confirming they had done exactly that. When we filed the complaint with the Consumer Financial Protection Bureau, the bank gave us contradictory answers. One said the reporting had occurred, another said it hadn't, and the third said the law simply doesn't apply to them. This is not a resolution. That is confusion used as a defense.

Second, lump sum repayment. AB 238 section 3273.24 c states that a lump sum repayment shall not be required for borrowers who were current on their mortgage when forbearance for began. We were current. Yet US banks letters repeatedly confirmed that when forbearance ends, we will owe all suspended payments at once. Again, when we raise this through the CFPB, the bank's response was that AB 238 is a quote, general statement that does not override their internal requirements.

The law is not a suggestion. It is the law. Third, interest accrual. AB 238 section 3273.23 gs states that no late fees shall be assigned as it shall be assessed, and no default rate of interest shall be charged during forbearance. Our statements show interest is accruing.

When challenged, again, the bank responded that any accrued interest rate reflects the rate agreed upon at origination. That answer doesn't address the question. It deflects it. In summary, US Bank has told us in writing, and through the CFPB process that they do not consider California state law AB 238 binding on their operations. They have simply given us contradictory information on all three issues.

They have left us wildfire survivors trying to protect our home and our credit without clear answers or legal compliance. We have done everything right. We filed complaints. We made calls. We sent letters.

I researched the law. I informed them of the law. I even cited Supreme Court cases multiple times. I also have a day job and this isn't it. The bank's response has been to contradict itself and dismiss the law.

I'm asking the board to take action to formally raise this issue with the California Department of Financial Protection and Innovation, to contact US Bank directly, and to ensure that other Eaton Fire survivors are not facing the same violations. We trust the law will protect us. I'm here today because it doesn't appear to be working. I'm asking you to help make this work. Thank you.

Thank you. Next, we have Lucius Bebak. Welcome.

Hello. Hello. Thank you for listening today. My name is Lucius Babak. I've lived in Los Angeles my entire life, and I am a fourth generation Californian.

My wife and I lived in Altadena with our two young boys, Leon and August, ages three and five, in a 1925 Jane's cottage on Poppy Fields Drive. After many years of searching, we finally found and bought our first home just two and a half years before the fires. What drew us there wasn't just the house, it was the community. Our street had summer block parties, Easter egg hunt for the kids, and neighbors dropping off cookies at Christmas. We truly found our community and home.

My wife and I would often pinch ourselves and say how truly at peace we felt. Living in our storybook cottage was especially meaningful because May 2025 would have marked the hundred year anniversary of Altadena's historic Jane's Cottages. We were just months away from celebrating that history when everything was lost. On the night of January 7, our lives changed forever. We evacuated voluntarily after checking our neighborhood group chat with neighbors and many of whom also had young children.

We never received an official evacuation notice. In fact, I even called the fire department and without any real urgency, I was told we were probably far enough away to be safe. We were five miles from Eaton Canyon. I won't go into all the painful details, but our home burned to the ground with no water or firefighter assistance. My children's school also burned down.

Life has very clearly become divided into before and after that night. Excuse me. In the weeks that followed, the biggest shock was the lack of guidance. In a moment of total devastation, it felt like every family was left to figure out everything on their own. It became our full time job to navigate insurance for a total loss. Understand our legal recourse, Replace clothes, toys, and other basic necessities for our kids. Keep their spirits up.

Manage our mortgage and property taxes, and most importantly, find housing. A year later, we're still nowhere near recovered, but we found some footing. We stayed with a friend for several weeks, then temporarily relocated out of state to stay with family so we could preserve our limited insurance housing coverage. We are now back in a rental near Pasadena and our kids are attending the school at a temporary campus. Meanwhile, rebuilding our home has become another full time job.

We are currently in the planning and permitting phase and our insurance funds to rebuild, which cover about three quarters of our losses if we're lucky, are tied up with our mortgage company and cannot be released until we have approved plans and a contractor. Financially, we're now approaching the strain of paying rent while also carrying a mortgage on a home that no longer Dealing with our mortgage company, Movement Mortgage, has been one of the most challenging parts of this experience.

I contacted them immediately after the fire, but there was no clear guidance on what options were available. Every time I called, I spoke to a different person and had to re explain that my home had burned down. And every time I was told they were acting as a debt collector and reminded of my balance.

I was eventually able to secure a ninety day forbearance, but I never received written confirmation and I continued getting notices that my loan was past due. To maintain it, I had to call back every ninety days and repeat the entire process. In December 2025, after a b two three eight had been established in September, my forbearance was shortened without my knowledge even though it hadn't been twelve months since the fires.

The only option I was given was to submit all my financials to their loan solution center and wait for underwriting to approve me. After waiting over a month, I finally heard back and was not approved for another forbearance, but instead was given a loan modification offer with a trial period and the first payment due by the March or I would face foreclosure proceedings.

In January, I called several times trying to reach a representative who could truly help. By a stroke of luck, I reached a manager who actually understood our situation and had the knowledge to assist. She submitted a correct request to underwriting for another round of forbearance despite us already receiving a mail packet outlining outlining the loan modification proceedings.

After calling back repeatedly and waiting nearly two months with no information, by a miracle, I received a call from the same woman just yesterday and learned that my forbearance had been approved by underwriting and extended beyond the twelve months. But I have to ensure I make payments to bring my delinquent balance under twelve months past due in hopes of potentially qualifying for a deferment.

I wanna highlight a a critical issue. Extended forbearance, especially twelve to 24 months can actually put homeowner homeowners in a more dangerous position if there is no clear path to deferral. Once you reach that level, you may be treated as severely delinquent and disqualified from deferral options entirely. That leaves homeowners with only two choices, accept a loan modification or come up with a large lump sum. So what looks like relief at the beginning can become a financial trap later on.

I'm trying to rebuild my home and resume my mortgage. This is not a typical financial hardship. This is long term recovery from a total loss. We need clear guidance, consistent communication and real accountability to ensure disaster relief policies are actually implemented. No one who has lost their home should have to fight this hard just to understand their options and avoid falling into deeper financial risk. Thank you very much for your time.

Thank you. Now we will move on to the online testimony. First to provide miss Rachel Jonas. Welcome. Can you give us one second while we lift the volume up?

Thank you. Can you test the mic, miss Jonas? Speak into the mic one more time, please. One more test, please. Okay.

Testing. 123.

Perfect. Thank you.

Okay. Great. So I am joining you today from Franklin, Tennessee where I am currently living with my family to save every dime that I can so that I can hopefully be able to afford to rebuild the home that I lost in the Palisades fire. My family and I were dropped from our insurance company two months before the fire, and we are extremely under insured. I moved to the Palisades in 2021 with my husband and my newborn baby.

We had our second baby about two years later, and we were supposed to celebrate his first birthday in our backyard with our family on 01/11/2025. But his first birthday party never happened. We lost our house. We lost our older son's preschool, virtually all of their activities, our library, the restaurants we go to, and more. We picked up the very little that we had and came to Tennessee on January 9.

We didn't have anywhere else to go, and we're still here today. So in the aftermath of our loss, my husband, Rob, and I cofounded an organization called Disaster Mortgage Relief. And this wasn't because we had planned to become advocates, but because they were drowning in impossible financial questions. And we realized that if we were struggling to get answers, then thousands of others were as well.

And so what I'm sharing today comes both from myself living this directly and from spending the past fourteen months listening closely to hundreds of other families who are living at two.

And I wanna start with something simple that I think sometimes gets lost in the policy language, which is that these are people who did everything right. They bought homes, they pay their mortgages faithfully, they maintain their insurance, they're responsible homeowners, and then through absolutely no fault of their own, they lost everything in a matter of hours. And so what they're facing now is not a financial crisis of their making.

It's a structural mismatch between the pace of disaster recovery and the financial systems that were never designed to accommodate it. And what that looks like in practice is the following.

So rebuilding a home in the Palisades and Altadena is not a six month or one year project. It is realistically a two to four year process. And for many families, including those in condos or mobile homes, even longer. Things like debris removal, permitting, contractor availability, code upgrades, building for insurability, waiting for the city to revitalize critical infrastructure, dealing with HOA boards, Every single step takes time, and that timeline keeps changing for us. So during all of that time, families are paying for somewhere to live.

Many are paying rent in markets that they did not choose, far from the communities they love. And some, like myself, have relocated out of state entirely just to make the math work while the rebuild happens. And so now that we're a year out from the fire, most people's additional living expenses are running out, meaning insurance won't cover their rent anymore. And at the same time, their mortgage payments continue on a home that doesn't exist.

And insurance proceeds, even when fully paid out, are typically designated for reconstruction, the materials, the labor, the code upgrades that now cost more than anyone ever thought they would.

There is no cushion left over to simultaneously service debt on a destroyed property. So AB 238 was meant to help, and in some ways it has. But what we are hearing from families is that the relief that it promised is not always being delivered the way it was intended. And for example, many borrowers who we've talked to have received a wide variety of explanations and guidance from their lenders about what AB 238 means for them, or if they can even use it.

And you've already heard some of those stories today. And there are many, many more like that. Some servicers are offering forbearance and then structuring the deferred payments as a balloon due in full at the end. And so many families are suddenly and often unexpectedly facing a payment of upwards of what could be a $100,000 at the exact moment that they're trying to figure out how they can even start to consider how to pay for construction costs.

And so for those who forego the balloon payment and decide to restructure their loan, so in other words, move their payments to the end of the loan, they are often faced with a massive credit hit. We're hearing from survivors in a survey we ran who did everything right, and they're watching their credit scores fall upwards of two, three, even 400 points.

This could not happen at a worse time as people are trying to rent homes or trying to take out loans for construction. These are people who were current and responsible before January 7, and they should not be penalized for surviving a disaster. Every month that passes without a clear structured fair path forward is a month that makes up harder for those families to hold on. This is extremely urgent. I cannot stress this enough.

And when these families cannot hold on, so when their financial pressure becomes too great, they don't come back. And we know this also from the surveys we have run that now that people are running out of their one year of mortgage forbearance provided by AB 238, they are facing an enormous financial stress, and many of them are now forced to leave the Palisades in Altadena forever.

And by the way, those who are most impacted are the teachers, the small business owners, the neighbors who made these communities what they were. They're the ones who are going to disappear, and that damage to the community will outlast the physical damage by decades. And so these families are not asking for a bailout.

They're asking for a path that matches their reality, defer the payments during the act of rebuild, allow the deferred payments to be literally help them fund the gap to be able to rebuild their homes. Which could literally help them fund the gap to be able to rebuild their homes. Many of these people are not in a position to take on new debt right now, and so this is a really meaningful strategy to help them.

And this approach, which could unlock, again, a significant amount of money for each homeowner is cost neutral, does not use taxpayer dollars, and is simply done by reengineering the existing get that people already have. It's a solvable problem.

The CARES Act during COVID showed us it can be done. We have the precedent. We have the framework. What we need now is the will to extend AB 238 and make sure it works the way that it was meant to. These families want to come home. Please help them get there.

Thank you. For that testimony. We will now move on to Carlos Valadivia, who's also online. Thank you.

Hello. Good morning. Can you hear me okay?

Yes. Thank you.

Great. Good morning, California Assembly members. My name is Carlos Valdivia. I'm a Pacific Palisades resident who lost his family's home of six years in the Palisades fire, and I'm at risk of financial ruin despite doing everything right as a borrower and a policyholder. First and foremost, thank you for passing ab 238.

My family participated in a b two thirty eight. We had a good experience with our lender, Morgan Stanley, who followed the law placed our our twelve month forbearance at the end of the loan. Now AB two thirty eight provides much needed relief for wildfire and Palisades fire victims as we navigate the the increased cost and and financial challenges of rebuilding our homes.

And we're dealing with insurance companies that refuse to acknowledge the actual cost of rebuilding our homes in the Palisades, and we're using delay tactics to refrain from releasing funds that are within our contractual policy limits. For many of us and and to no fault of our own, we are underinsured and lack sufficient coverage to rebuild our homes as insurance companies denied coverage and and dropped policies for fiscally responsible homeowners over the the past several years.

Unfortunately, many Palisadeans don't qualify for relief under the governor's CalSys mortgage fund because our loans exceed the twenty twenty five conforming loan limits for Los Angeles County. And we we carry responsible, fully underwritten loans. We use a substantial amount of our savings as down payments to acquire our homes, reflecting the the extremely high cost of real estate and Palisades. You know, and and we've been loan payments in full and and on time prior to the Palisades fire, and we continue to do so.

The 12 mortgage forbearance granted by lenders and and governed by ADT 38 is ending or or has ended for many Los Angeles fire victims like my family.

We are at significant risk of draining what remains of our lifetime savings and having to take out the construction loans to rebuild our our houses. Insurance companies are unwilling to release our full contractual policy limits are sorely needed to meet the high rebuild construction costs in the Palisades. Our only means of reprieve is by extending the twelve month loan forbearance to thirty six months by passing AB eighteen forty seven.

18 AB eighteen forty seven reflects thoughtful leadership and and a clear understanding that recovery is gonna take several years, not months. And it'll provide very much needed relief for survivors of the of the Palisades and wildfires that are seeking to rebuild their houses, their lives.

We're not asking for loan forgiveness or permission to to skirt our financial obligations. Instead, we're merely asking for an additional twenty four months of loan forbearance to conserve resources and provide some financial reprieve as we continue to navigate the significant challenges of rebuilding our homes. Now loan amounts would continue to be deferred and and added to the end of the loan, and they'll be fully repaid when the loan matures, is refinanced, or or the borrower sells their house.

Lenders will be made whole, and we're only asking for the same thing to be made whole by being able to to rebuild our homes and and restart our lives. Now I I respectfully urge you to put forth every effort to get AB eighteen forty seven passed through the California legislator legislature and signed by governor Newsom as soon as possible.

AB eighteen forty seven is our only means of reprieve. And as we move forward trying to build our homes given all these financial difficulties, you know, we honored our financial obligations before the fire and then are committed to keep doing so. You know, we're simply asking for the the time necessary to recover and and rebuild. Without action, many of us will be forced to to sell our properties and abandon rebuilding altogether, permanently displacing long time, long standing members of our community.

Thank you again for for your continued commitment to helping all Los Angeles fire survivors move forward with with rebuilding our homes and our lives.

Thank you, Carlos. Moving on to our next and last testimony, Alicia Cohen, who's also online. Thank you.

Thank you, Carlos. Moving on to our next and last testimony, Alicia Cohen, who's also online. Thank you.

Seems like we're having a few technical difficulties. If that's the case, if she's available to come back on or we get her back on, she's more than welcome to provide testimony.

But in the meantime, we'll move on to the next

Sorry. Can you hear me?

No problem. Thank you. Yes. Thank you. Welcome.

Thank you everyone for taking the time to listen to us and and help us advocate for financial relief that our community really needs. My name is Alicia Cohen. I'm a mom of two young children. My son Leo is five. My daughter is two and a half, which is crazy thing.

She was 18 at the time of the fire, and by the time we move back, I you know, she'll be in elementary school. I was also a real estate agent whose business was rooted in our community. And not only was our personal lives uprooted, but my income was severely affected as well. And like so many others, we were severely underinsured. And we lived on Livorno Drive in Marquez Knowles.

It was a quiet family neighborhood where kids ride bikes, neighborhoods neighbors knew each other, and many families had been there for decades. It's a community made up of many working families, retirees, and long time residents. The Palisades is really a diverse community, and I think that's something that doesn't get enough attention just out there in the world. And Marquez really did reflect the diversity of of that. One of the biggest reasons we chose to live in the neighborhood that we did was the public schools.

And, sadly, our elementary school, which is walking distance from where our house was, also burned down. And we never when we bought our house, we never thought we're gonna be able to afford it, but an opportunity came up in early COVID that allowed us to to make that move. It was a risk, but we felt it was a smart investment, and it was our nest egg. And sorry. And it was a home where we felt we could have our kids grow up and feel safe.

And we did stretch financially, but we believed in what we were building. And our house is not a luxury home. It was a nineteen fifties mid century, and it was everything to us. And on January 7, we lost it. And the day of the fire, I was actually in the ER getting stitches unrelated to the fire, but I was never able to go back.

And I left with nothing. All I had were the clothes on my back. And at the time, all I cared about was just getting my kids to be safe and and getting them to be with us. And we just didn't even know what kind of financial pressure was gonna build on us after the fire. And the financial realities is we're gonna be due for a mortgage on an empty lot.

We have a limited loss of use. We also have to rebuild everything. Oh, sorry. I I understand that my network connection is not good. Can I can everyone hear me?

We can hear you. Continue, please.

Okay. And this is and my income was also disrupted. And there's no version of this where the numbers make sense. And this isn't a one time hit. It's ongoing.

Every month, the pressure compounds. Every decision feels like choosing which obligation we can't meet. And our savings are running out, and we don't know how much longer we can keep this up. But paying for housing while still carrying the weight of knowing that our mortgage is coming up, the clock is running out, and we have a major gap in what, our insurance has given us and what it'll cost to rebuild.

And we're already seeing many of our neighbors forced to sell their lots at the press values, and and it's our greatest fear that that will become us, especially knowing that it is our nest egg.

It was our primary asset. It was our safety net, and we hope to pass it down to our children. Losing it was just not something that we even thought could happen, and and it could put us in financial ruin. And we always paid our mortgage on time. As Rachel said, you know, we are responsible lenders sorry.

People that took loans, and now we're faced to be in a situation where we may not be able to continue, but and forced to have our credit scores impacted. AB two thirty eight did give us breathing room at a moment when we had nothing, and continuing it is really the only real path for us to to continue and have a chance of coming back. And if not, we'll be forced to sell our lot, again, at a depressed value.

And if we sell, we'll have to be gone for good. And it's not fair that the only people that can come back are the people that have the resources.

And we're not asking for loan forgiveness. What we're asking is for a restructure that will allow us to have the time that we have forbearance to be added to the back of our loan. And we're just trying to survive and and to come back. So please give us an opportunity to to come back and give us not just an opportunity to rebuild our home, but also to protect our financial future. Thank

you. Thank you. With that, that concludes the survivor presentation testimony. Very much appreciate you all opening up your personal stories. I can only imagine how difficult it is to share and in a way relive those crises and horrific situations.

So my heart goes out to you and we hear you loud and clear. We'll now be moving on to the next portion of today's committee hearing. Service experience and also with us, we have the Department of Financial Protection and Innovation to give us that perspective as well. So from the DFPI department, Susan Suzanne, excuse me, Martindale. From the California Bankers Association, Vanessa Lugo.

And from the California Mortgage Banker Association, Indira McDonald. Please all join us on stage. And I believe one of our presenters is joining us virtually as well. Two of them. Wonderful.

Okay. If, miss Suzanne Martindale is ready virtually from the Department of Financial Protection and Innovation, You're welcome to begin.

Thank you, chair of wanna hear me?

Yes. Thank you.

Wonderful. Thank you, Chair Valencia, Assemblymember Harabedian, members of the banking committee, and everyone else for being here today. My name is Suzanne Martindale. I am the chief deputy commissioner for the Department of Financial Protection and Innovation. The DFPI has a dual mission to protect consumers and foster responsible innovation in the financial marketplace.

And we are here today because we regulate state licensed financial institutions, including banks, credit unions, and mortgage lenders and servicers. I just want to start by saying that we are wholly committed, as you all are here today, to supporting survivors of the fires as they seek to rebuild and recover from this horrible disaster that hit our state last year.

Right away in January 2025, Governor Newsom announced commitments from several major national lenders to offer LA fire impacted homeowners forbearance relief for at least ninety days, as well as limitations on fees, negative credit reporting, and foreclosures in the immediate aftermath. And here at the DFPI, we also worked with our state licensed mortgage lenders to secure similar voluntary commitments to forbearance for families suffering hardship and recovering from the fires.

So AB 238, which was authored by Assemblymember Harabedian, built on these initial commitments to establish in law a right for LA fire impacted homeowners to receive up to twelve months of forbearance relief.

Following on that passage of the law, in January, the Governor's office once again secured extended commitments from major national lenders to provide additional relief beyond the twelve months as homeowners seek to rebuild and return to the area during this next phase of our recovery. As part

of the administration's whole of government approach to supporting recovery, the DFPI rigorously responds to any wildfire related borrower inquiries or complaints through a dedicated wildfire rapid response team. Now since March, we have received 300 consumer complaints regarding mortgage forbearance related issues primarily. And more than 91% of those, we have been able to resolve in the consumer's favor so that they can get the relief to which they are entitled.

And now I'll take a brief moment to talk about some of the trends we've been seeing in the complaints that we have received from people impacted by the fires. At the DFPI, we have a consumer services office.

This office engages with consumers, licensees, and other financial service providers to facilitate communication and try to assist people in the dispute resolution process. Complaints we've received have primarily focused on forbearance requests, folks seeking to get forbearance and maybe initially being denied, having confusion related to how to navigate the customer service system at their lender or servicer. And we've also heard stories about issues related to withholding post loss insurance funds as well as funds initially being held in non interest bearing impound accounts.

That is a matter that the legislature also took up last year and resolved for the passage of AB493. But those are the main trends we have heard from the complaints that we have received.

So again, forbearance request issues, issues dealing with customer service of their lender or servicer, post loss insurance withhold withholding, and then sorry, fund withholding, and then issues related to non interest bearing accounts where their funds are being held. So we've received these kinds of questions and have taken a white glove approach to navigating helping people navigate the system if they report that they are being that they are trying to recover from the fires.

So we have really worked very, very hard and gone above and beyond wherever we can to talk to people on the phone. We've heard their stories. It's sad to to hear the really compelling stories that our survivors have shared here today.

And I can tell you that at DFPI, we have heard very, very similar stories come directly to our department from from survivors of the fires. We do have to note, however, that there are some limitations to how far we can go with our legal authorities.

So for example, if a complaint pertains to a federally chartered bank or financial institution, that doesn't really fall within our jurisdiction, so we have to take these complaints and file them with the Federal Office of the Comptroller of Currency, which charters national banks. And we also do route complaints to the Consumer Financial Protection Bureau. That said, we are clear eyed about the fact that at the federal level currently, there has been a lot of scaling back of oversight of financial institutions.

So even when we know that the federal regulator is the primary regulator, we know that there may not be a lot of success in getting the federal regulator to act. So we do continue to use our what we call our soft power to facilitate a resolution. We will pick up the phone and call national lenders.

We will try to contact directly, our federal partners after we've routed a complaint to make sure people are paying attention and really taking these complaints seriously because our team, works really hard every single day to ensure that California consumers are not misled or subject to unlawful, unfair, deceptive, or abusive acts or practices.

We continue to come closely monitor these complaints to ensure that people are achieving the relief that they're supposed to get under AB two thirty eight and other applicable consumer financial protection laws, because people have committed to provide that relief, and we wanna make sure that people, receive the relief and the breathing space as some of our survivors, aptly mentioned so that they can recover and we can see people return to their homes.

And so with that, I will pause and thank you again for allowing us the opportunity to join you today and testify.

Thank you, miss Martindale. And before we move on to the remarks and opening statements from the other presenters, it would be helpful in my opinion to provide some framework in terms of what the state's jurisdiction is on banking and finance issues compared to what the national and federal jurisdiction is on banking and finance issues. Right? It was shared by a couple of the presenters, national programs during the pandemic and other national disasters that have been implemented to help in these spaces.

But I just want to ensure that folks understand the limitations that the state government has when dealing with banking, mortgage, and financial issues.

That's not to say that you don't have our commitment in pushing. And Assemblyman Harabedian and I were even discussing maybe taking a trip out to watch to DC and speaking with, the congressional committee on banking and finance to ask for their specific support and focus on what California is dealing with. Right? But I also just want to be mindful and level set in that way. So a little bit of context in that would be helpful. Thank you.

Absolutely, mister chair. So for for the audience, we have, at the DFPI, authority written in our state's financial code under multiple laws to charter state chartered banks and credit unions, as well as license various lenders and servicers that handle mortgages. So we so our jurisdiction is rooted in California state law.

At the national level, through the National Bank Act and other acts of Congress, there's a national regulatory framework that applies to the largest national banks, and they are primarily regulated by the Office of the Comptroller of Currency, the National Credit Union Administration, and the Consumer Financial Protection Bureau.

So not to get too into the weeds around legal issues, but we our jurisdiction can butt up against what's called federal preemption, where the federal government is the primary regulator and states may be challenged in how far they can go to seek to oversee national institutions.

But that said, even where our jurisdiction may be limited as a technical matter, we still do go above and beyond when a California LA fire survivor contacts our department, and we really do encourage people to go to dfpi.ca.gov, click on the contact us button, and you can file a complaint online. You can also call us on the phone. You can even mail in paper if you would like, and we do look at every single consumer complaint that we get and take it very seriously.

If it's one of our state licensees, that's great. We've got people in our system.

We can contact them. We have contact information. But, also, again, even if it's a federally regulated institution where our jurisdiction, our legal authorities may be limited, we nonetheless do reach out anyway to educate the folks over there about the passage of some of these new laws to ensure that they are aware that here in California, folks have a right to some relief right now if they've been recovering from the fire. So I do hope, mister chair, that is helpful context.

Yes. Thank you. And to restate that California has and will continue to press the legal boundaries and do whatever we can to support Californians through this crisis. With that, we'll move on to the remarks from Vanessa Lugo with the California Bankers Association.

Hi. Thank you. Can you guys hear me?

Yes. Thank you.

Thank you, mister chair and assembly member Harabedian. My name is Vanessa Lugo, and I represent the California Bankers Association here today. I appreciate the opportunity to speak here regarding a b two thirty eight and its implementation. This legislation is a product of more than eight months of collaboration between the author, CBA, and a broad group of lenders, all working toward a shared goal, and that's addressing the significant financial hardship faced by individuals and families impacted by the twenty twenty five LA wildfires.

First and foremost, we extend our heartfelt sympathies to those who suffered loss during these devastating fires.

In the immediate aftermath, before any legislation was introduced, CPA took proactive steps by partnering with the governor's administration to provide mortgage forbearance and options for affected homeowners. This early action reflects our commitment to delivering timely, meaningful relief when it's needed most. This emphasizes that lenders were already mobilized and assisting borrowers well before a b two thirty eight was enacted. Prior to passage, lenders remain committed to supporting homeowners working closely with the bill's author to address provisions that conflicted with investor guidelines and contractual obligations.

Mortgage servicing is not simply a matter of policy preference.

It is a highly regulated function governed by federal law, investor requirements, and detailed servicing standards. As conversations around implementation continue, it's important to recognize that any policy in the mortgage forbearance space must account for the diverse requirements of investors in the mortgage market and align with existing post disaster relief programs. These include programs offered by Fannie Mae, Freddie Mac, and the Federal Housing Administration, the Department of Veterans Affairs, and the USDA Rural Housing Service.

Each of these frameworks is designed to evaluate borrowers on an individual basis, recognizing that financial circumstances vary significantly in the wake of a disaster. For these reasons, policies in the area in this area should align with existing GSE and private investor loss mitigation frameworks rather than introducing new and conflicting and often confusing requirements.

Clear and consistent communication with borrowers is essential. When policies diverge, they risk creating confusion leading to unintended consequences and potential financial harm for the very consumers we are all trying to support. It's important to note that automatic forbearance in times of disaster can have negative consequences to borrowers. Forbearance is not payment forgiveness. It is a payment deferral.

While it provides short term relief, it can create larger financial obligations for borrowers later and sometimes worsening their long term financial position. Borrowers must still repay missed payments through high higher monthly obligations, loan modifications, or deferred balances, each of which can increase long term costs or create payment shock when forbearance ends. I understand the commitment, or the committee has an interest in receiving data from our members on the implementation of a b two thirty eight.

Unfortunately, CBA does not have the answers to those data points and does not collect data on behalf of our members. CBA is a trade association that by design advocates public policy and have and I've come prepared to address how we have been engaged on that public policy.

I would defer to the regulatory to the regular to the regulator DFPI who we heard just before me, and they may be able to shed some of that light, which they already have on some of those questions you asked of us. Lastly, CBA is aware of a desire to continue different forms of relief for the LA wildfire victims. As we have done in the past, we will continue to engage with the stakeholders and remain committed to working collaboratively to solve any problems.

We appreciate this dialogue to better understand any compliance challenges associated with a B two thirty eight and to identify those issues in a thoughtful and detailed way. Thank you for the opportunity to share our perspective today.

Thank you. And next, we have Indira McDonald from the California Mortgage Bankers Association. Welcome.

Perfect. And I'm on. Indira McDonald, on behalf of the California Mortgage Bankers Association. And joining me here, for questions also is our chief executive officer, Paul Jalati. Our members include non bank mortgage lenders and servicers.

Thank you very much for the invitation to testify before you today on the outcomes review of a b two thirty eight, and to hear directly from the families navigating the complex recovery journey while dealing with extraordinary loss recognize and acknowledge all those impacted by the fires and the families here today, and thank you all for sharing your stories. Please know that at California MBA, we understand the critical role mortgage servicers play in providing stability during recovery.

Our members have been working hard to find flexible and creative solutions for borrowers while still ensuring that they are following the law and the mortgage investor contract requirements. At California MBA, we take a firm stance on compliance and encourage our state regulators to investigate all reports of mishandling of loss mitigation applications and barriers to access and encourage swift swift remediation action for any violations of the law. Overall, California MBA member servicers have been need of loss mitigation relief.

We remain fully committed to supporting the recovery. Today, I will focus my comments on loss mitigation on customer engagement and the industry's best practices when major disaster occurs like the devastating fires in Eaton and Pacific Palisades. I'll share some of the details and the step by step support system provided by loss mitigation specialists who are the professionals that mortgage that offer the mortgage relief for the borrowers.

I will also discuss how these professionals act as an intermediary between the borrower and the investor who holds the loan and owns a security interest in damaged or total lost property. When a major disaster occurs and a federal disaster declaration is issued, mortgage servicers activate disaster response protocols.

These protocols focus on providing timely, compassionate, and compliant relief while minimizing borrower confusion and preventing unnecessary foreclosure activity. Servicers maintain systems that monitor federal and state disaster declarations and immediately flag loans located in impacted zip codes or counties. Servicers immediately apply disaster status codes to affected loans in order to flag accounts for borrower outreach, and follow any special program rules that may permit suspending late fees and prevent foreclosure activity as required.

Standard best practice provides that servicers reach out early to borrowers in disaster zones and with clear explanations of available relief, timelines and next steps. Information should be accessible in multiple language languages and through multiple channels.

Proactive communication with the within the first several days of a disaster declaration may include sending the borrower outreach via phone, text, email, mail, and providing clear messaging around the disaster relief options that are available. Initial communication offers contact information for the borrower to reach loss mitigation team professionals to facilitate dialogue about the borrower situation and awareness of the assistance available. When specialists interact with borrowers, our best practices include approaching interaction with empathy and patience, recognizing that many borrowers may be displaced or experiencing trauma.

Specialists must avoid presenting options in a way that pressures borrowers. Key, initial questions can include understanding if the borrower is safe, if the property is damaged, and if so, to what extent.

If the borrower is currently occupying the property, have they started an insurance claim, and have they experienced income disruption? These questions guide the appropriate relief options, which can include the AB two thirty eight forbearance relief.

Specialists will explain the forbearance, that forbearance may be the first line relief tool and they are to clearly explain what forbearance means, that payments can be paused or reduced, the expected duration, commonly three to twelve months depending on the program, and the guidelines of the loan owner, such as Fannie Mae, Freddie Mac, FHA, VA, USDA or a private investor, those guidelines of the private investor.

Specialists will also explain to borrowers that forbearance means payments are paused not forgiven, and explain how missed payments can be addressed through the resolution op options if that is including things like the payment deferral, a payment, a repayment plan or a loan modification. And they are to explain if extended forbearance is permitted.

Generally, forbearance documentation requirements are to be minimized and standard acceptable practices may include verbal hardship statements, self attestation of impact, and deferred documentation when appropriate. However, servicer specialists act as an intermediary and are required to ensure compliance with contractual investor guidelines, federal mortgage servicing rules, and disaster specific regulatory directives, and these obligations may require specific hardship statement documentation, borrower consent and resolution and certain resolution outcomes.

During forbearance, specialists provide ongoing borrower support including regular check ins and best practice periodic outreach which can range from every sixty to ninety days during forbearance to confirm, the recovery, progress, assess the settlement status and evaluate income recovery, etcetera. Especially considering severe damage or total loss, specialists are trained to escalate additional support as needed to assist with insurance claim coordination, estimate repair timelines, consider escrow implications, and long term rebuilding factors.

Specialists also escalate cases when borrowers report repeated documentation issue, insurance delays that affect the repayment timeline, displacement, if displacement is long term, and then of course if there's any report of abuse or or fraud following the disaster.

Furthermore, specialists encourage borrowers to work with HUD approved, housing counselors whenever they are confused about options, face multiple financial hardships, are considering pro and certainly of considering property disposition options. In closing, as we continue necessary support to borrowers throughout the rebuilding phase and as your committee considers new regulatory relief options, we remain fully committed to working with the committee and ask that any additional relief mandates imposed on servicers align with federal regulatory investor requirements. As we've discussed forbearance is a temporary financial bridge.

It's not a long term solution. While it provides immediate relief, the deferred payments are not forgiven and must ultimately be repaid often through the loan balance or a structured resolution.

So extending forbearance without a clear path forward may unintentionally increase the financial gap for borrowers, making it more difficult for families to stabilize and rebuild once the forbearance period ends. Keeping this in mind, we recommend the committee consider longer term support relief solutions such as direct financial payment assistance relief programming and additional funding assistance that does not have to be repaid by families who are in need of the rebuilding assistance.

To address this, we encourage consideration of longer term collaborative solutions that provide a true pathway to recovery. One potential approach could include a state supported funding structure that operates as a silent second or a subordinate lien. Under this type of frame framework deferred forbearance obligations could be satisfied in a way that allows borrowers to stabilize during rebuilding process while the state holds a subordinate position that is repaid once, in a future refinance or transaction after the recovery is complete.

This type of structure represents a meaningful partnership between the state and the mortgage industry. One that supports borrowers in rebuilding while avoiding additional immediate financial strains on families recovering from disasters. As always, California MBA, we remain committed to working closely with the legislature and your committee and the assembly member to help shape effective policy, and we thank you very much for the invitation to testify today, and we would be happy to answer any questions.

Thank you, miss McDonald, for that, that presentation and and and remark. I could understand, where we're coming from, as chair of the banking finance committee in the assembly, that was hard to follow myself, understanding banking and finance policy creating banking and finance policy at the state level. We heard from our constituents, continuity and clarity in this very critical time and convoluted time would be most helpful. And I I think that was in part testimony at how complicated this process actually is for our residents.

So I think that speaks for itself. But with that, we'd like to hand the microphone over to our colleague Assemblymember Harabedian who has some questions as well.

Thank you. Thank you for that, mister chair. Thank you for everyone for being here. I appreciate appreciate the testimony. I'm gonna start, I think, with DFPI just because I think that'll clarify some of the some of the questions I have for the lenders and and services.

So if miss Martindale is still with us, I was going to start with her. And I wanted to get a sense Okay. Miss Martindale, are you are you with us?

Yes. Assemblymember I'm here. Can you hear me?

Thank you. Obviously, what we're trying to figure out is where are the biggest breakdowns in implementation of AB238? You anecdotally mentioned a few different items that came out, but I would just like to know where are the biggest breakdowns? Is it awareness?

Do the banks and the institutions not know about AB 238? Is it their actual just behavior and disregard for the law? Or is it limitations in enforcement authority on the state's behalf? As the chair noted, there is interplay between state and federal law on these issues. And we did craft AB 238 to basically say that it applies unless it is specifically not allowed by the GSEs or any other bank's investor guidelines.

But I do want to know from your perspective having these 300 or so cases, where is the biggest breakdown and how can we improve that so that consumers get relief?

Of course. So what I can say is earlier last year in the immediate aftermath, you know, of course, the governor did announce and sought to disseminate far and wide some voluntary commitments to forbearance relief and some of the other limitations on negative credit reporting fees and foreclosures with national institutions. We did our own outreach to our licensees and got many of them to agree to be listed on our website as publicly committing to similar voluntary relief.

That was before the passage of AB two thirty eight, and most of the complaints we received were before AB two thirty eight. And even despite that not yet being in in law and in effect, we were still able to get the vast majority of homeowners some relief, but there was an initial period of education where we might have heard from the c suite of one of our licensees who signed up and said, yes.

We're committed to relief. But, unfortunately, as a practical matter, the homeowner would be calling someone in a bullpen at customer service who said, I don't know what you're talking about. What is this new forbearance relief program? So there was an initial somewhat understandable period of educational learning curve understanding what has been discussed in government about providing relief.

Now post AB two thirty eight that is now in law, now in effect, we have shifted toward as part of our administration of our laws and our oversight of mortgage licensees to updating our own policies and procedures and using our key tool, which is to examine the institutions that we regulate.

We go in, we sometimes go on-site in person and inspect the books, listen to listen to consumer phone calls to determine whether our licensees are now going forward, complying with the law, complying with those provisions.

And we have work underway on that and, of course, if we do find that one of our licensees is not complying with AB two thirty eight, that may result in a referral to our enforcement team, then it goes to the lawyers and the investigators who would then seek to determine whether we have violations of the law that warrant us taking action.

So we're in the early months of implementation and administering this law as well as the other laws that have already long been on the books to apply to our mortgage licensees to ensure that consumers are having their rights respected. But that is we're we're still working through that process as the regulator at the state level.

Based on your data and the 300 or so complaints, who who is not complying and who are the the worst offenders? We've heard actually that the testimony from from the survivors was was was really enlightening and that it's across the board, national institutions, California institutions, non California institutions. What does the data show us in terms of who are the baddest or the worst complying actors to for February?

Well, our consumer complaints are confidential, so I'm not in a position to name specific names. However, I can say that we have seen a mix of both institutions that we regulate under California law as well as some of the largest nationally chartered financial institutions who have been there are a few that I can say are are repeat players, but it's a mix of state state regulated and and federally regulated institutions.

And you you can't tell me who the repeat players are?

I'm not in a position until we have a public enforcement action to reveal the name because, again, our our consumer complaints are confidential.

Got it. Can you tell me though, why do you think this is happening? So do you think it's because and this is where the reason why we're having an outcomes review is how do we better implement this policy so that I think everyone has said so that there's a clear pathway forward so that no one is left worse worse off because of this. Why why aren't these institutions complying? Is it because they don't believe they need to comply?

Is it because they don't know the specifics of the law? Is it just is it something else in your professional opinion?

It is there's no one, no one factor, I would say. There's a mix of factors here. There is still a learning curve, although the learning curve has played out long enough, and they believe that there's a better public awareness about the fact that here in California, we are providing state level, you know, relief in codifying law related to forbearance and other limitations to give people that key breathing space.

Again, in the early in the early weeks and months, clearly, word was still getting out about what the governor's office had negotiated, what our licensees have publicly committed to. I also should mention that we have a targeted outreach team, and we've done what we can to make sure that people out in the public know that we exist, that we are a resource.

It's also why I'm very grateful that you've invited us here today because we want people to come to us. We go to community centers, offer webinars, and table at various various institutions and in public spaces to try to let people know that we are here, that we can handle complaints. We can try to connect consumers with the mortgage lenders and servicers to try to broker a solution. But we also know that, you know, as government, it's it's difficult. Not everybody knows that we exist.

So we also do frequently part with partner with community based organizations who are the trusted voices in their communities. We have reached out directly to local organizations based in the LA area to make sure they have our materials so that they can also tell people, hey. Come tell DFPI what's going on because the more information we have about trends, particularly when it comes to an institution that's licensed by us, that gives us the signal, hey. We need to go in.

We need to we need to potentially examine one of our licensees and make that referral over to enforcement if we're seeing a violation.

And as we develop more information and are able to share more publicly about what we're learning once we get through to an enforcement action, that will also help put people on notice about who's not following the law and what people need to be thinking about if they're mortgage lenders and servicers to ensure that they are compliant.

Got it. Two quick ones and then I'm gonna move to the servicers and the banks. What what tools are you using to actually because we talk about 92% of the cases have been resolved in the consumer favor. That can mean a lot of different things. So I'm not sure if you can expand on that, but what tools are you using to actually get compliance?

Are you threatening licensing? Are you are are there financial penalties? What what have you seen as an effective tool for compliance?

Right. So what we get, and primarily through our consumer complaint portal, our portal is set up so that a consumer can log in, create an account, can write a narrative, but also attach and upload documents so that we can actually see hard evidence of what they're receiving from their lender or servicer. And, again, of course, we have to protect everyone's data privacy and and all the rest, which is why, you know, we are very, very careful about how we handle those those documents and that information.

But that helps us get what we need so we can turn over and contact one of our licensees, for example, and say, hey. You know, we're hearing from consumer x.

Here's what they're sharing with us. Here's the documentation they've provided. You need to go fix this problem, and that is how we try to facilitate a solution. And so that's that's the primary way that we're making sure that and and and as we need to, we can escalate. We have developed strong contacts so that we if we need to, we will call you know, we've called the CEOs of some of our licensees to say, hey.

We're hearing from this consumer that they're they can't get get a forbearance. It looks like they should be eligible. So please can you work on that? So we will also use our own process to escalate, to upper management and leadership and our licensees to ensure that they are treating each and every one of these complaints with with white glove service so that we can get people the relief to which they are entitled.

That's helpful. Last question was before and after 238 was enacted. I think there seems to be a stark contrast. A lot of these stories, even when the governor's voluntary mortgage forbearance program was in place with some of the institutions that we heard from here that were clearly not following it, what were the complaints before and what were the complaints after? Because I think that goes to the effectiveness of the outcomes of this of this law.

Yeah. The complaints before a b two thirty eight were largely related to not being able to get a forbearance or being told that at the end of the forbearance period, there may be a lump sum payment. We've heard some of that referenced here today as well. And then also that that disaster relief funds were being held in non interest bearing accounts.

That was a major theme that we heard as well where people were concerned that they're not getting the full benefit of of the relief funds that that they're that they're hoping will help them rebuild.

And so that's why, you know, AB two thirty eight and AB four ninety three taken together being passed really provide some some good protections and good tools going forward. Since AB two thirty eight's passage, we just continue to hear some confusion. I would say we are still hearing about confusion regarding whether there will be a lump sum payment at the end of a forbearance period. And so now we know that AB two thirty eight does address that.

So we continue as the regulator to ensure that we are, through our supervision and enforcement tools, getting compliance from our lenders and servicers to make sure they're following those laws and are clearly communicating to consumers what their rights are as required.

Helpful. Thank you very much. Mister Chair, did you have any question? Okay. I'm just gonna quickly move then to the lenders and servicers before we get public comment.

I appreciate everyone's time. Thank you again for the testimony. Ms. Lugo or Ms. McDonald, I guess we're in an absence of data.

I think one of the questions that we all have, DFPI has confidentiality concerns For your members, I'm not sure what you can share. But I guess first, how many disaster related mortgage forbearances are actually in place now for the Palisades and the Eaton Fire? Because I think there's not a clear sense of scope who's actually utilizing it and what is, you know, the financial impact on your members.

Because, obviously, if we're talking about extending it, doing anything, I think we'd all like to know just how just how large of, of a program do we have here.

Mike.

There we go. And then Paul can chime in. So as a trade association at California MBA, we have limited access to data. We we do have access to public data and we often depend on the department. As they license our non bank, licensees, they collect annual data, both annual reporting is to them on loan level data, which is exactly the data that you have requested.

They also all of the licensees at DFPI use a system, the NMLS system and they report quarterly and DFPI has access to that data also. And then DFPI can also do surveys if there's data points that they're not currently collecting, they have statutory authority under our licensing law to ask for additional data.

And so the reason I'm saying that is to encourage additional dialogue with the department because as a trade association, it's you know, we get data if it's informally volunteered from our members and our members is a limited, number of the licensees. The department has access and, you know, they examine, as she said, they audit, and they collect data from every single licensee across both non bank, which we represent, as well as the state chartered banks and credit unions.

And so it's important if you want a comprehensive picture, which I I think is what is really important here, is to get a comprehensive analysis through the department.

And so with that I would If there's anything else you wanna add.

No. There's nothing else that I would actually add to that. I mean, we we've we've gone through and had conversations with our non banking lenders and talked to them about the, foreclosure process, and gotten, you know, how they operate in the forbearance. I'm sorry, not foreclosure, forbearance process. But the data aggregation from the servicing side of those

non banking institutions is hard to grab in Enduro said, that's, you know, that's that's done on a quarterly basis through the department.

Thank you for that response and clarity in terms of where we can actually access that information. So maybe if I could turn it over to the department, if the committee were and will request that information, can the department collect it? And then can they make that information public so that we have a firm understanding of how many mortgage forbearance related requests due to the LA fires are being processed?

The department is in process of engaging with our licensees to obtain data and get an understanding of where things are with forbearance. So we're happy to to partner with you and continue that conversation as we as we continue to implement the law.

Thank you.

Thank you, mister chair. That'd be helpful. I mean, what we what we're really trying to figure out is, you know, how many requests were made, how many were denied, how many requests were actually, granted, but then there were provisions or expectations that didn't comply with February, etcetera. And so I think, mister Chair, I think that would be super helpful just to find out where we stand, and and I think it would enlighten all of us. So appreciate that.

I I guess then going back to the banks and the servicers, how did your members operationalize February? How did you ensure that there was compliance? Was there was there training? Was there communication with the individual banks and servicers to make sure that and, miss Lugo, we can hear from you on this as well, to make sure that there was compliance?

Because it it it appears as though either there isn't communication happening to the extent or training to the extent that it should, or it's happening and it's being disregarded in certain cases.

So what did you do, and do you believe that that your members are disregarding it or they just don't know?

I I would to to answer that, I would say, I do not believe our members are disregarding it. I would you know, as not believe our members are disregarding it. I would, you know as department had stated, it took a hot second for it to to move through and for it to get down to the bullpen, if you will. When we were communicating recently with our, non banking lenders, we asked what the protocol was. And a lot of it seemed to be triggered based off of what FEMA was reporting as the natural disaster or the disaster zone based off of zip code.

And we went through protocols a with a handful of we tried to reach out to our larger non banking lenders because they would have a much larger pool. Again, we support, you know, lenders in the state of California, large, medium, and small, non banking lenders. And and the and the protocols are in place. The protocols to, you know, respond diligently, to have outreach before they're being reached to, and and walk

So and miss Lugo, you can respond. I have a follow-up question, but if you wanna respond to that. Just what you did with your members to make sure that there was compliance with February.

Thank you. So I think I I referenced it in my statement and, just wanted to to repeat that, you know, CBA does not collect data on behalf of our members, so I don't have that information, to share. But I do wanna go back to what, the regulator said, Susan, in receiving those 233 complaints of which I believe she said, 224 have been resolved. So that makes only nine under review. That's a pretty good resolution rate.

That's an A minus rating, and I think that's a strong outcome and demonstrates that the bill is working effectively. But it also also shows the value in providing clarity, especially during the times of crisis to avoid that confusion.

So so did you did did the bankers association do any formal outreach to members, trainings, etcetera, to make sure that every member knew that 238 was implemented correctly?

Yeah. Well, during the process and the negotiation and eight months of compromise, assembly member, they were aware that that that those conversations were ongoing.

Okay. So to the extent that any member isn't compliant, do you think that's out of willful blindness? Is it is it because they don't want to comply? If if we've done everything to educate them, I think what we're trying to figure out is why isn't there compliance?

I'm not aware of any of them being out of compliance.

Okay. The, I guess, the the last, the last question for for the banks and services are when when you're denying forbearance because there is and I think the chair hit on this earlier, and I think it's really crucial that we nail down. There is an interplay between federal and state law on this. And to the extent that anyone is being denied forbearance because certain contractual or legal provisions aren't allowing for forbearance. How are you actually educating, folks on this?

Because I feel like there isn't a lot of clarity on why someone's being denied forbearance when they are given forbearance. Again, I think this lump sum payment, issue is a critical one because it's precisely why we implemented two thirty eight because people will You know, I think a lump sum payment or loan modification is, again, only benefiting one party. It's definitely not benefiting the survivor. So how how do we going forward ensure that that doesn't happen across the board, right?

I mean, I'm not sure what the justification is for that, because I don't think investor guidelines would ever require a lump sum payment or a loan modification.

In every conversation I've had with banks and servicers, it is one of many of the suite of options. So I guess where where do we go from there on that issue?

Well, in regards to education, I'll answer that. You know, one of the pillars of the California Mortgage Bankers Association is education. And we hold, symposiums, webinars, and conferences where we ensure that our members are participating, and and their understanding of new legislation that's been passed.

Not only that, but at a board level, we also operate to the the the same crux, the advocacy that we have for, the consumers and for, what we do, and that's lending money to consumers that wanna purchase homes as a non banking lenders. We're we're we're steadfast with ensuring that our members understand what the laws are and understand what regulation is.

We we partner a lot with the DFI, etcetera. So we we provide a a a huge amount of resource to our members. And it's not just at a c level, executive. We work with individuals that run servicing, individuals that run underwriting as well as technology and innovation within our organization. So that's something that we hold strong to us.

And there's constant communication within the California Mortgage Bankers Association and our lender members, our non banking lender members, about regulation, about AB 238 you know, and and all the, proposed laws that are coming down the pipeline as well.

I'd like to respond also to your question. So part of the the There we go. So I would just wanna speak a little bit to the secondary market. So for independent mortgage banks, we originate loans and we sell them on the secondary market. That's separate from the portfolio loans that you might have from a a bank or another lender.

So in that sense, when the loan is originated, the origination in that contract, the terms are bound by the service the guidelines of wherever it's gonna be sold. So so we sell to Fannie Mae, Freddie Mac, the GSEs and also the federal agencies, FHA, USDA, VA, and they all have their servicing guidelines. Our members also sell to private investors that provide capital.

We bring the capital to California, we originate the loan and then it's sold on the secondary market and at origination, those terms are consistent with whichever servicing guidelines are the investor. Those that's who determines what those are.

And then, you know, they're they're generally packaged and sold into mortgage backed securities and the payments on those securities, whether the borrower is in forbearance or not, those payments have to continue to the investor. So in our case for a non bank servicer, the non bank servicer as the borrower is in forbearance, the servicer must upfront those payments to the investor, continuously with the interest. They're also typically obligated to cover the hazard insurance and the property taxes.

And so part part of I think the confusion that can happen and perhaps, could be to blame here is that there are so many different servicing guidelines. Right?

There are many different investors and the, servicers who are front line with the in terms of serving the borrower and and helping them through the process, they have they're bound by those contracts that were the terms at the origination of the loan.

Got it. Yeah. Yeah. I I reviewed a lot of those. I mean, some of the private ones I haven't.

I've never seen a lump sum payment being required as part of those guidelines. I've never seen negative credit reporting being required. And so I think going forward, what we're gonna really want in implementing, you know, all of this, you know, whether it's February or 1847 that would extend it or whatever other solution, I think we really need a commitment here that the negative credit reporting stops.

I mean, I think that people are trying to get, you I don't I don't under you know, I really don't understand why a contractual obligation is being followed to do that. It's hurting your borrowers.

It's going to really impair their ability to get other loans to rebuild. And it's really, you know, obviously something that you've heard today is a consistent problem. And I think the lump sum and those modification issues going forward, I think we're just gonna need your commitment here today, both miss Lugo and the mortgage bankers, to to stop doing that. I mean, I I don't know if we need a law, but I I just think it's too much.

So can you just I mean, can we get your commitment and, Ms.

Lugo, can we get your commitment to, to not do that going forward for for the sake of, the survivors.

You know, what again, we our community who we support at the California Mortgage Bankers Association are the non banking lenders that originate the loan. A lot of who we heard from from today, PNC, LoanCare, Truist Bank, etcetera, those are those federally chartered banks. I can't give you the commitment for those banks because we don't they're not part of our association.

Understood.

Am I am I behind that concept? You know, that that's not the question. Right? Am I understanding, you know, what all of you are going through? Absolutely.

Are we here to support? Absolutely. Are we here to collaborate with you and ensure that there's a model not just for the fire victims of of what we're talking about today, but going forward for other natural disasters, state and federal? Absolutely.

I would add also. So one thing in response that I think we can do and we can commit today is to work with you in collaboration, hopefully with the federal agencies. The majority of non bank independent mortgage banks, we do government backed. That's our specialty. We do government backed loans and we are bound by those servicing guidelines so can't commit to something outside of those.

And you are right. The GSC guidelines do provide the protection from the lump sum and I do believe that that the borrowers who absolutely have the government backed loans should be getting that and we support the FBI taking enforcement action if they're not for sure. So we can commit absolutely to talking to the federal agencies.

Let's collaborate and work together in terms of if if there needs to be some changes to those servicing guidelines, under the extraordinary circumstances and time, know, we're we're all here to collaborate and have those conversations out.

I appreciate that open mindedness. And reverting back to the data question, this is exactly why it's so important that we have this information because what our residents are communicating is lack of clarity and process. And to your earlier remarks, not to I don't wanna diminish the importance of the data the detail in those, but it is extremely complicated.

And if we don't have clarity and data, we don't know the purview that the state has on certain mortgages versus the mortgages that we don't have governmental say over. And I think that's why mortgages the state has oversight on relative to the number of mortgages that the federal government has.

I don't have at my finger fingertips the number of mortgages. We have across bank credit union and our non bank mortgage lenders and servicers. We at the state level licensed more than 400 institutions. So so we would need to go back and and and get and see if we can get that that data. We will continue to partner with you on seeking to get better answers about about the status of some of these requests from a lawyer.

Thank you. And again, our commitment is to not only work with the industry, but also work with the federal government to figure out that bridge, and ensure that all Californians that are being impacted, whether it's a mortgage that the state has a bit more say in, or the federal government has a bit more say in, gets the same type of service and also support throughout this process. With that, if there are no more questions, we will move on to the public comment portion of the hearing.

If you have a public comment, please line up to my right, your left, approach the podium one at a time and provide your marks your comments and remarks within two minutes. Thank you.

Please state your name and limit your remarks to two minutes each. Thank you.

Hi. My name is Jane Lawton Potele. Good morning, Assemblymembers. I'm an Eaton fire survivor with a standing home that is still unlivable because of smoke and ash contamination.

In January 2025, just after governor Newsom announced the post fire mortgage relief, we still didn't know if it was safe to return to our home or our community. Ash covered the property, and even in short visits, it made us ill. We knew we were facing major disrupt disruptions to my husband's business, our main source of income, so we contacted our mortgage provider to request, they offer a one year, to request a forbearance, and they offered a one year forbearance in three month increments.

At that time, our lender told us this mortgage relief would function like a deferral with payments added to the end of the mortgage. And not to worry, we would not face a balloon payment at the end, and this was Flagstar.

As awareness grew over the realities of contamination and constant feet dragging by insurance providers, we opted to extend our forbearance during the time our loan was sold to a new lender. The new lender informed us that the terms of forbearance would be exactly the same as our previous lender. This was mister Cooper.

What they didn't tell us is that we late and we later discovered was that their standard procedure was to expect homeowners to pay the entire past due amount once forbearance ends, essentially a big balloon payment. They didn't treat forbearance as a deferral, and the promise from our original lender was written on the wind.

We struggled for weeks to get this resolved, finally getting our account into a review process. We were assured by this second lender, mister Cooper, that they would get back to us with a determination. While waiting for that determination, we found out that our loan was transferred to a third lender. They put our account into collection action, which we only discovered when they FedExed us a collection paper. That was yesterday.

Now our mortgage is in default. That our and that could be, affecting our credit. And they expect the entire year of missed payments to be repaid in one lump. This is not relief. It is instability layered on top of disaster.

It's causing even more stress when we remain in dispute with an insurer that refused to recognize the contamination in our home or cover the cost of a safe recovery. Meanwhile, the insurance coverage paying for our rent is running out. I urge this committee to strengthen protection so that mortgages cannot be sold off to third party lenders during a disaster forbearance and prevent the undermining of mortgage relief through loan transfers, missing records, servicer confusion, or illegal repayment demands. Thank you.

Thank you.

Hi. I'm Beth Andrews. I defended my home with garden hoses as the entire neighborhood was burning in the morning. My neighborhood around the golf course burned in the middle of the night and also burned in the morning. I am a victim not only so I cannot access AB 238.

Recently, after trying for this entire 14-15 months, Roundpoint Mortgage will not honor it. They are offering us three months. They will ding our credit, and they will ask us for a lump sum. I'm also a tech worker who's unemployed, and I'm running out of my employment insurance as well. So I think for victims, we need to also especially since Meta is now going to lay off 20% of their workforce, There are not jobs for tech workers and and health tech workers like myself.

So we need help. But I am also a victim of, rent price gouging. There is no accountability at the county for structure standing. The county has refused after hundreds of emails we have sent and conversations with the assistant to the supervisor. They refuse to meet with structured standing people.

We are drowning. We are drowning. We are financially ruined. Farmers insurance is financially ruining my family. Why is the county not meeting? And why are lawmakers not meeting with Farmers Insurance and demanding that they honor the contracts? And why? I'm here today, struggling. I'm a victim of price rent gouging. The county ghosted me.

The And then, also, I am a victim of mortgage non renewal. There's a moratorium. Where is the County?

because that's coming next. Wheres the help?Where we need help now. the County has shown no leadership. We would like a meeting with all the structures standing. Thank you to Congresswoman Judy Chu, who met with 40 of our families, of our farmers families. Judy Chu came and toured my home in February '25. We knew there was a problem, not even a month later. And Farmers and Insurance was denied.

Judy Chu toured my home. It is toxic. And their public health has failed. How can public health have signs in my neighborhood, but no public health emergency? Thank you very much for your time. My family is financially ruined. We need help.

Please keep your remarks to two minutes if you can. Thank you.

We will. Hi. My name is Alexandra Cacciatore, and this is Grace Kona Wells, and we're from the Mobile Home Park in Pacific Palisade, one of the two that was destroyed. And we are excluded from this bill despite having outstanding loans that we are still required to pay. Grace will speak about it a little bit.

So I am the president of Tahitian Terrace Rent Residents Association, and I'm here on behalf of over 600 residents from three actually mobile home parks in Pacific Palisades that were completely destroyed in the January fires. This is about the only affordable housing community on the coast of California that houses essential workers, nurses, teachers, artists, actors. You know, AB two thirty eight was created to provide mortgage for variance so that Californians impacted by disaster would not be forced into financial distress while trying to recover.

But in practice, that protection did not reach everyone. I want to share what that looks like for our community.

We are homeowners. We bought our homes, many of us over decades investing everything we had. But because our homes are classified as mobile homes, most residents do not have traditional mortgages. They have chattel loans, which are treated as personal property.

And I might add, those loans are not secured, like a regular home loan. So we have less favorable terms and we also have, a lot of us have adjustable interest rates that have changed a lot over the years. So these are loans that, that are very different from home loans and yet we are still paying them as if they are mortgages.

And because of that technical distinction, we are excluded from mortgage forbearance programs like Cal Assist. So today, families who lost everything are still required to make monthly loan payments on homes that no longer exist. And at the same time, they're paying for temporary housing and navigating insurance gaps and trying to figure out if and when they can return. So it's not like I mean, we're in the same boat as everyone else. The problem is that we do not own the land.

And because we don't own the land, if for some reason we don't return and the mobile home park isn't rebuilt, which we don't have any certainty about, we have nothing to sell to cover these loans or to try and recoup any of our losses from the mortgage. We're just on the line for the debt. So in some ways, we are uniquely at risk for a complete loss.

So that outcome does not reflect the intent the true intent of AB 238. Two homeowners can experience the exact same disaster, one in the single family home, one in the mobile home, and only one receives meaningful relief. The other is carrying left carrying a financial burden with no safety net. And in communities like ours, that difference determines who can come back and who is permanently displaced.

And one of the things about mobile homes that make them so special is that they're an unusual model for housing that, provides, dense housing in an urban area. It's kind of the ideal. It's what you want to relieve some of the housing pressure in a city like Los Angeles where housing is so expensive, and it presents an alternative model for how to house people in, what appear to be single family homes. We're the fastest to rebuild, and yet we're stuck with these mortgages.

A mobile home in our park starts at $500,000 and goes all the way up to $1,600,000.

So but, so when you review the outcomes with of AB 238 I respectfully ask the state to close this gap. Recognize chattel loans as eligible for disaster forbearance because these are homes, not vehicles. And just to point out, SB 996 might dovetail well with 238. Nine 96 recategorizes mobile homes as real property. You might take a look at that.

Require lenders servicing these loans to provide automatic forbearance and declared disaster areas and ensure programs like Calluses explicitly include mobile home owners. Because if AB 238 is meant to protect Californians after a disaster, it must protect all homeowners, not just some. So we're just asking to be treated the same. Thank you. Thank you.

Thank you.

Hello. I'm Shanya Englin, the vice president of policy and advocacy at the California Community Foundation. Thank you for your leadership assembly member, Harabedian. And thank you chair Valencia for convening this critical conversation here in Medina. CCF is committed to walking with fire survivors through recovery and rebuilding until everyone is safely home.

We were really proud to support AB 238 and stand firmly with survivors in insisting that it that it be uniformly implemented and very strongly enforced. And we stand with community in calling for necessary extensions and expanded consumer protections. Survivors deserve and desperately need that relief as we've heard clearly today. And survivors deserve accountability. I think another thing we heard very loudly and clearly today is a need for more and mandatory compliance reporting.

The voluntary intermittent reporting that that you've been asking for data, everyone has been asking for data. Clearly voluntary intermittent reporting is not meeting the need to really see what's what's unnecessary here. We also encourage all of you and everyone to really interrogate the claim that the small number of formal complaints to the state is evidence of success. I really humbly suggest and would encourage, to talk to the folks here and beyond.

What that is is evidence that struggling overstretched survivors actually don't know what their options are.

I would suggest that most folks that we talk to don't even know that that's something they can and should do. So that's not a place where you're gonna find good data. We urge the continued centering of community voice, including the wrenching testimony like that you hear today. And for every one story you heard today, there's you heard today, there's 20 more that couldn't be here today at least.

As any policy solutions are considered, and we stand ready to continue to partner with each of you and with the legislature to ensure that that remains true. So Again, thank you.

Thank you.

Hello. Mike Rothschild. We lost our home in Jane's Village in Altadena. We actually had a fairly smooth beginning of our escrow process with our mortgage lender truest, but that was the high point because everything since then has been an absolute nightmare of contradictory answers, information that is unreliable, threatening letters, and people who have no idea what they're talking about. For our process, we've really been more concerned about what happens after our forbearance.

And we have received so many different answers that listing them all here would keep us here all day. We at one point were told we could have a loan modification. We were then told we could not because we have no home to collateralize. We were then told we could if we filled out an application, which was about the length of a phone book.

We were then told we did not have to fill out an application, but we had to get approval from Fannie Mae because they were the holder on the loan.

We called so many times talking to different people who we had to repeat our trauma to every single time. Several of them did not seem to be aware that there had been wildfires in California, which sounds nice. Finally, after almost a year and our forbearance about to end, we talked to a customer service person who said, I don't know how to help you.

We then begged to speak with somebody in a management level and threatened to stay on the phone all day if we could not, speak to someone. We did finally get the email address of someone who is handling our many, many complaints about escrow interest, about insurance, about, delinquency letters that we received on the same day we were told our forbearance had been extended.

At one point, someone from Truist said about, the forbearance law and the escrow law that they follow the law on a case by case basis. That's not actually law. So what we're asking for is an enforcement mechanism that is robust and puts some kind of fear into these companies because we can tell them what they need to do, which we did. We sent certified letters to our mortgage company telling them what they had to do for us without an enforcement mechanism.

They're just going to keep doing what they're doing because there's no reason for them not to do so.

So the the laws are fantastic. There there needs to be a stick with the carrot. Thank you very much.

Thank you.

Hello. My name is Daryl Moore. I just found out about this meeting at 10PM last night. Who is Assemblymember Harabedian? Thank you for doing this, sir.

We need all the help we can get. My wife was born in Altadena. Her parents were the first black family on that street on the West Side. When we were married, after our first daughter was born, we moved up here in 1996. We stayed in an air we stayed in a back house at my mother mother in law's back house so we could save money to purchase our first home.

That house burned up on Poppy Fields Drive. That was my wife's whole life. But in that time, we finally saved enough money to buy our first house in 2010, which was on Palm Street. We lost our house. I tried to stay and fight it.

My garden hose and the wind blowing the water for 90 degree and and not a drop got on the roof. After the fire, we we evacuated. We we never saw one fire engine. No city, nothing. Our lights and our power were out.

Flash forward, we abandoned at 03:30 in the morning after a sheriff finally came down the street. It took us days to know when our house was if they made it or not. When we found out our house was gone, we had a friend that had a one two bedroom, one bathroom house, which we stayed in, my wife and three kids, for eight months. During that eight months' time, we looked all over to find something suitable enough to house my my wife and our kids.

We finally after being turned down over and over or too late or they never had any intention to renting to us, we found someone up in the Altadena to rent to us.

The prices that we have to pay for rent, people immediately started price gouging. The best we could do to get I had a four bedroom, three bathroom house. So the best thing we can do is get a three bedroom, two bathroom house back up in Altadena so we could look so I could be present to look at the rebuild of our house, which still hasn't even taken place right now. We've not any nothing's happened. My mortgage increased.

I'm paying more money for a house that does not exist now. I pay $4,202 a month for that. My house that I'm renting is just enough for me and my family to be in. I paid $6,000 for that house. I am paying $10,000 a month just for housing, not electric bills, not food, not gas, not nothing.

Now most of you would think if you're gonna spend $10,000 a month to live somewhere, it's gonna be in Beverly Hills. Right? So we are struggling here. We all of us have PTSD. We wake up in the morning thinking about it.

We go to bed thinking about it. There's no relief. We're wondering how in the hell we gonna come up with $10,000 at the end of every month. My wife is killing herself at work. She's working fourteen to sixteen hours a day.

I'm an aircraft mechanic. All my tools burnt up. What I've been able to contribute to my house, I can't do. My toolbox is extensive, full of tools that you just can't go into harbor freight and buy, specialty tools. And I'm also a musician, and I had a recording studio.

That was my other source of income. I now have no income. It's all on my wife. So anything that you can do, do it. But also make a a a a a a bigger push to inform everybody in Altadena.

Like I said, this is just a copy of a copy of a text that sent me here. We knew nothing about it on the West Side. You know what I mean? So reach out to us. We'll support you if you if you're trying to help us, we want we wanna be down for that.

But man, look. We can't go through this people. It's it's too much. It's too much right now. It's too much. So, thank you for doing what you can do for all of us. But, man, you know, anyway, I'm I'm done.

Thank you.

I stand with you Mr Moore. Hello Assemblymember Harabedian, the team here. I am also thankful for Cecilia that did let me know from CCF about this meeting happening today. What you just heard from Mr. Moore is one in probably a 100 of those in the black community. We know that right now there is a civil rights discrimination investigation happening right now in regards to rapid response.

Yes, there is discrimination happening completely in different spaces in regards to this recovery. And so, my name is Heavenly Hughes. I am the cofounder and executive director of My Tribe Rise. I've been a fifty year Altadena. We've been serving the black and brown community in several different affairs events that's happening happened in the Pasadena Pasadena area.

This particular catastrophe, none of us were prepared for, which I know we are all learning as we go. We do not want the support from our elected officials that's supposed to be that has been presented as a way to help regards to this forbearance forbearance is, a harm because of the balloon payments.

We've all We are one of the first organizations that started to pay these balloon payments because we were very concerned about our black homeowners, our matriarchs and patriarchs that don't have the bandwidth to make all these phone calls, call over and over again, send the letter saying that this is in place. You guys are supposed to follow these rules. Or and what is the I'm glad you brought up.

Can you guys hear me? Because I wanna be sure I'm heard. Wonderful. I'm glad you brought up how are you all going to enforce this type of, forbearance not to be a balloon payment because these mortgage companies are not, are are not receiving the information where they're making changes accordingly. They are still holding, our survivors accountable to pay these balloon payments.

One of our survivors sent a bill showing that they not only was given a balloon payment, but compound interest on that amount. So we were sold, and I I and I'll say that it was sold to us, and we shared it to our community members that this is a good thing. It's a good thing to get this forbearance. And then three to six months later, it was a hardship. So we really appreciate you all looking into that.

We send, several emails to the mortgage companies. Are we trying to assist our matriarchs and patriarchs to send this with your, to your mortgage company, but they are not responding. So when we're when I heard, who was that, Jane Lawson bringing up today that, mortgage companies are buying out. So their second and third mortgage company is it seems like they are dodging diving and dodging these if these letters that say that this is what's supposed to happen.

Assembly member, Harabedian, these this is not the first catastrophe.

That sometimes is what's mind boggling to me is, like, this is not the first time that our California has experienced this type of catastrophe. These things should already be put in place, tax exempt, being able to receive tax exempt funds and grants. That's something else that we ask you to look into right away, because those who those survivors that need instant emergency relief funding, and that's what we need right now. They are they are gonna be taxed on that money this year.

That's what I'm understanding that if they receive funding through or through nonprofit organizations that's over, I believe they said $19,000 which most people when you just heard Mr.

Morris say he's paying over $10,000 in one month. We're trying to give funding that's substantial to help people hold on to sustain until this new city, this new build, They can't be taxed on that money because that's also causing a harm. So, there's several things that I feel that should be put in place immediately. And of course, that is the forbearance or mortgage freeze. There should also be a, at least three years of no price gouging when it comes to the rent.

I believe you already addressed that. But we need these things put in place for at least three years, not us having to come back every month and say, there's still price gouging. Still can't there the forbearance now, they're just gonna access for money. This tax exemption, that should automatically be in for three years as well. There's just certain things that should be already put in place, because this type of catastrophe is not.

I wanted to be sure because I heard you all talking about data and I'm concerned on who you're getting the data from because My Tribe Rise works with so many organiz survivors, the black and brown. We use the word vulnerable. Too loosely because it's our black community that's at risk in Altadena, West Side Alta D'ina of never returning due to these things that have been brought up. And when you someone mentioned today, there was only nine complaints not addressed there was only nine complaints not addressed.

When I got a host of complaints that I know are not addressed.

So let's be sure we're reaching out to the most vulnerable. When I say that, the organizations that are also working with the most vulnerable. Thank you. Thank

Thank you. We are getting close to time, so please try to keep your remarks to two minutes. Thank you.

Comment if I may. When I first heard about Assembly Bill 238 I read it twice. Transformational. We've never seen anything like this before to provide mortgage relief to people who've gone through disaster of this scale and this scope. And I'm listening to my my former colleagues in the profession.

Days. And in this logo on the line, I understand where you're coming from. You do your job, and you're representing the business very well. Provide this relief to borrowers so that they're able to rebuild their homes. This is not complicated.

This is not complex. Yes. I am aware of investor guidelines and various, you know, requirements that attach to loans. But we have a steep hill to climb because I'm afraid the industry is is not going to be helpful based on what I've heard.

And it's very, very hard to hear the very powerful comments from my neighbors who came here today to bear their soul, and then to be hit in the face with a reality of what you're confronting to try and try and make this a reality, to provide relief.

So I wanna thank you for those efforts and encourage you to continue to do so and to put in place a strong, you know, unassailable enforcement mechanism, so that people will be able to rebuild their homes. Thank you very much.

Thank you.

Good morning. I'm a teacher by profession, so I wrote down my lesson plan. I am here on the behalf of the Emergency Housing and Stabilization Committee for the In Fire Collaborative. We are the long term recovery group in Altadena. What we are seeing on the ground does not match the systems that are being described.

There's a significant gap in data collection. Frankly, it is a minimal to non existent in capturing the real experiences of survivors. Our community based organizations and local leaders are ready and willing to partner with agencies and institutions to help collect accurate real time data so that solutions truly reflect what families are going through. We also want to emphasize the importance of accountability at the local, state, and federal levels. Policies and protections only work if they are clearly implemented, communicated, and enforced.

For example, AP 238 has the potential to offer critical support through mortgage forbearance protections. But many survivors are still facing confusion, inconsistent application, and in some cases, noncompliance. This gap between policy and practice is where families are falling through. We need to be clear. This is not just a housing issue, it is a poverty issue, an anti displacement issue, and a mental health crisis.

On my way to take my kids to school, I have two drop offs in the morning, I pass a rental that's placed at 6,200 on the market for a two bedroom on Altadena and Allen. Our data shows that most families in community simply cannot afford these rates. We conducted surveys from May to April 2025, and again in November to December 2026. What we are seeing is deeply concerning. Families were not in not previously in poverty and are now measuring in poverty.

We want our community to return, rebuild, and recover after this painful tragedy. We have families living in cars, homeowners, and renters. While navigating insurance delays, unclear mortgage processes, and rising rental costs, the stress, trauma, and instability are compounding every day. And without intervention, we risk long term harm to entire families and broader communities. In Altadena, we must also acknowledge the historical context.

The community has deep black history rooted in homeownership, stability, and resilience in the face of systemic barriers. What we are witnessing now risks becoming another example of disaster capitalism. Where those most impacted are pushed out, and recovery does not benefit the people who built this community. Recovery must be equitable and must be intentional. We are asking for stronger coordination, clear communication, and meaningful partnership with community organizations.

We are already doing the work on the ground. We also want to express our desire to stay closely connected to ongoing legislation and policy efforts so that the realities we are seeing in real time can help inform stronger, more responsive solutions. We are here and we are organized and we are ready to help. We can conduct surveys and data collection necessary to address the needs from our community that we learned today is not available for review.

Thank you again, and we look forward to continued partnership to ensure our community is supported, protected, and able to recover with dignity.

Thank you. Welcome.

Thank you. I know times of considerations will be very brief. Mister assembly member, thank you to you and your team. They've been very helpful to me and my wife resolving or at least bringing up and discussing many of these issues. So I do wanna say thank you. Some of them are here.

Your staffs are doing great. So I just wanted I hope you understand that. To to the to the, ma'am, from the DFPI, she recommended the office of the comptroller of currency. I did do that. They said it's not them.

So to the person who said that there were nine complaints, I brought it up to the FPI. They said no. Comptroller, they said no. CFPB, they said no. So by that definition, I have no complaints.

Just glad to know that one. Finally, to the representatives who are here as part of the trade organizations for the banks, I'm seeing lawmakers trying to bring things and trying to work with the powers that they have. I hear people trying to honor their ends of the contract and they're saying, okay. But the banks are going, hey. This is what the law is.

This is what we have to do. I'll ask, there's nothing that prevents you guys from proposing a change or modification. And I'll ask you right in front of me. You guys are saying that you're here to help. Are you gonna go back to your trade organization?

And you don't have to get all of them to agree. You can just get one or two, and that helps a couple people and say, hey, can you go reach out to your people in this area? And will you make a modification for them? And that's I'm not asking you to get everyone to agree. I'm asking you to go talk to your banks, your members.

Can you make a request? When you guys talk to the banks, can you ask them? You don't have to get a law. Not everything has to be a law. And if also, doing a mortgage modification is perfectly legally fine today.

And if you can ask them why aren't they willing to do it, the other man who says that they're they're complying with the law, you can also do more. Thank you.

Thank you. Welcome, and please keep your

Thank you. I'm Kirsten. I am an altogether block captain. Like many of my neighbors, we lost our home the night of the fire. We have Rocket Mortgage, and they initially had no idea what we were talking about, but in recent months, are more informed, have granted the forbearance, but are not telling us what will happen when the forbearance ends.

So it's likely that it will be a balloon payment. They've said there's a possibility that it will get deferred or amortized, but that leaves us not knowing what's gonna happen. Our ALE ends in October. It could be about the same time that our forbearance ends, and then we too will have a $10,000, a month payment that we cannot afford. I sincerely hope and that you are able to hold the banks accountable and that the trade organizations are able to push for what is being requested.

I don't have a lot of faith in in that system. And so I think that the state needs a third way. We need another way to to access funds that are gonna carry us through, at least till the lawsuit. So not forever, but for a number of years. I heard a couple of solutions presented today.

We aren't able to access the Cal Assist because of some areas of that, which I'm happy to address at a later point. That could be a way is opening up more of that for residents or something else that, takes the burden off of us. Don't have a lot of faith in the capitalist system. I do have more faith in our government. So help us out, so that that, we don't have to continue to face the hardships that we do.

Thank you. Thanks for holding this today.

Thank you. I believe this is our last speaker. Welcome.

Yes. Hi. My name is Esther Lopez. I did not plan on speaking today. I wanted to catch Heavenly on her way out just to thank her, for saving us.

So when I'm a 52 year resident of Altadena. My family has been in Altadena since 1974 and we lost our home completely. After the fire, when we found out that there would be mortgage forbearance offering offered to several various lenders, we were lucky to jump on it because we do have JPMorgan Chase Bank. So we applied for the mortgage forbearance not knowing that we would have to pay a balloon payment at the end of the year. So around December 2025, they were calling me.

They were calling my husband. They were sending letters saying you're due for a, balloon payment. And our insurance payout was, we only had access to, a certain amount of funds because our insurance payout was in a CD that we could not touch. We were doing four month CDs at the time. Heavenly My Tribe Rise, we were saved by a grant that we were offered by my tribe rise.

It was adopt a survivor grant, that we were selected for in December, right? I think the week before Christmas, which allowed us to pay that balloon payment because had it not been for the adopt a survivor grant, we wouldn't have we would have had to borrow the money because we only had again, I had not planned on speaking today. I just wanted to thank Heavenly. And so now we're in the so we paid the balloon payment.

Now we're in the process of applying for the Calusis mortgage, And it's been this is the second time we've tried to apply for it because they they're asking for escalation of all the Zales that we received, which were many because a lot of our friends and family didn't want to, donate to our GoFundMe.

They wanted to sell the money directly to us because they heard that GoFundMe takes a percentage of it or they just wanted to make sure that it went to us. Right? And so, just a lot of, you know, requirements. We're almost there. I think we just each need to give them a vial of blood and then we'll probably be approved for it.

But if we're not, then, you know, the extending the forbearance is what we all need because I am nowhere near rebuilding. I haven't sat with an architect or, you know, because I'm shopping around for to and vetting contractors to find out what we can rebuild. Because with the money I received from my insurance payout, I could I know for a fact that I could not rebuild what I had just want and nothing more.

Just to be sure we're understanding forbearance, freeze, or it helps. It helps without these extra the balloon payments. And then you have to do the applications all over again said, was a year, and then you have to ask for another three months or another six months. And you're concerned every time, it and are we gonna have to do this balloon payment again after this six months? Yeah.

Deferring is absolutely different than the balloon. So than the balloon. So thank you again. Thank you, Assemblymember Harry.

Thank you. That concludes our public comment portion of today's committee hearing. Let's move on to closing remarks. Assemblymember Harabedian, if you have anything to add.

Nothing to add, mister chair. I just appreciate, all the testimony that we heard today. Very helpful and instructive on next steps. And just thank you, Mr. Chair, and your staff for for putting this together and all your work and support in these areas. So thank you.

Thank you. And in closing, just want to commend the leadership that Assemblymember Harabedian has put forth on this very specific and critical issue. Your tenacity has shown through the testimony of our residents today, which I appreciate. The committee now has some work to do, some follow-up work to do. Thank you to the survivors, to the testimony for opening your stories and your hearts to the committee, so we get a better sense of exactly what's going on here in Altadena and the surrounding LA communities.

We heard the need for addressing the selling of loans. We heard the credit impact component. We heard about the extension forbearance, the balloon payment challenge as well. So a lot to analyze and figure out how we move forward to continue to addressing these issues that Californians are experiencing here in LA, but also what Californians have experienced across the state through past crises. Thank you to Pasadena City College for hosting today's hearing. And with that, this committee hearing is adjourned. Thank you.