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This guidance is directed to financial institutions, lenders, and mortgage servicers in California whose customers may be experiencing financial hardship as a result of ongoing land movement that has disrupted utility services and evacuation warnings for impacted residents in the City of Rancho Palos Verdes, California. The Department of Financial Protection and Innovation recognizes the serious impact to borrowers in communities affected by such natural disasters and encourages lenders and servicers to work with these customers to meet their financial needs.

Background

On September 3, 2024, Governor Gavin Newsom proclaimed a state of emergency in the City of Rancho Palos Verdes, California, as a result of ongoing land movement that has disrupted utility services and evacuation warnings for impacted residents.

Guidance

The Commissioner encourages financial institutions, lenders, and servicers to work constructively with their customers and propose solutions to meet their lending needs as the recovery continues. Such solutions may include offering payment accommodations, such as deferrals or extensions, and loan modifications to the rate or term. Prudent efforts to modify or restructure the terms of loans will not be criticized by examiners.

Furthermore, the Commissioner acknowledges that some licensees may experience an increase in delinquent or nonperforming loans and troubled debt restructures as a result of the financial impact to borrowers caused by natural disasters. The Commissioner will consider such increases in adversely classified assets within the context of the state of emergency, and supervisory responses will be measured and appropriate. The Commissioner supports and will not criticize efforts to accommodate customers in a safe and sound manner.

This guidance does not modify any existing law or regulation.