In September 2025, California enacted Assembly Bill 238 (“AB 238”), which established the Mortgage Forbearance Act and requires mortgage servicers to provide eligible borrowers experiencing financial hardship as a direct result of the January 2025 Los Angeles wildfires with up to 12 months of mortgage payment forbearance.  In 2026, California enacted Assembly Bill 1847 (“AB 1847”), which expands the protections provided under AB 238, including extending the maximum forbearance period to 24 months and extending the deadline for borrowers to request forbearance to January 7, 2029.  AB 1847 also establishes additional requirements relating to borrower eligibility, documentation, and repayment of forborne amounts.  More recently, on September 15, 2026, California enacted Assembly Bill 1842 (“AB 1842”), the California Mortgage Relief Act, which establishes a broader statutory framework for disaster-related mortgage forbearance.  Unlike AB 238, which is limited to the specified Los Angeles wildfire disaster, AB 1842 applies to qualifying residential properties rendered uninhabitable as a direct result of a federally declared disaster.  Among other things, AB 1842 requires mortgage servicers to provide an initial 180-day forbearance period, with extensions available in 90-day increments up to a maximum of 12 months.  The law also establishes requirements concerning borrower eligibility and notices, prohibits late fees and default interest during the forbearance period, addresses credit reporting, and establishes requirements for post-forbearance repayment options.  These laws establish and expand California's requirements for mortgage servicers responding to borrowers affected by disasters.  Financial institutions should review their mortgage servicing policies, procedures, systems, borrower communications, and loss mitigation practices to ensure compliance with the new and amended requirements, including the changes taking effect January 1, 2027.  Please join us at the November BCG Monthly Telephone Briefing for a discussion of AB 238, AB 1847, and AB 1842, including the requirements applicable to mortgage servicers and steps your institution should take to prepare for the new requirements. Handout to be posted on Thursday, November 19th.

 

 

The Banking Regulators’ New Examination and Enforcement Standards and How They Impact Institutions 

The Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC) published a new final rule in the Federal Register on September 1, 2026 (91 FR 56004) to define the term “unsafe or unsound practice” for purposes of examinations and enforcement actions with a focus on “material financial risks.”  The new final rule also revises the supervisory framework for issuing matters requiring attention.  The new final rule became effective on November 2, 2026, and will impact examinations and enforcement actions going forward.  Additionally, on September 24, 2026, the Federal Reserve Board (FRB) revised its Statement of Supervisory Operating Principles which also addresses the FRB’s priorities for examinations and enforcement actions, and indicates the FRB will focus on those issues that could have a significant impact on the financial condition of an institution.  The Federal Financial Institutions Examination Council (FFIEC) also issued a proposed rule in May 2026, which if adopted would make significant revisions to the CAMELS rating system.  The FFIEC’s proposal intends to strengthen the link between CAMELS ratings and a financial institution's safety and soundness, and would make several changes to the “management” component of the ratings.  In this Monthly Telephone Briefing, we’ll discuss these recent developments from the OCC, FDIC, FRB and FFIEC addressing examinations and enforcement standards, and how they impact institutions. Handout to be posted on Thursday, November 19th.