Guidance to Financial Institutions, Mortgage Lenders and Servicers Regarding Borrowers Affected by Recent Severe Weather Conditions and Fires

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 severe fire and wind impacts that have destroyed properties, disrupted utility services, and caused evacuation warnings for impacted residents in the Counties of Los Angeles and Ventura, 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 January 7, 2025, Governor Gavin Newsom proclaimed a state of emergency in the County of Los Angeles, California, as a result of ongoing severe wind conditions and resulting fires that have destroyed properties and structures, disrupted utility services, and caused evacuation warnings for impacted residents.

On January 8, 2025, Acting DFPI Commissioner KC Mohseni issued a proclamation pursuant to Financial Code section 1092 for state‐chartered banks to close any or all of their offices in affected areas until the Commissioner determines the extraordinary situation has ended, or until the officers of the bank determine that one or more offices should reopen.

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 disaster conditions persist and 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 Department 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.