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Committee advances disaster forbearance and small‑business lending bills; multiple items referred to Judiciary
Summary
The committee moved AB 1842 and AB 1847 (disaster mortgage forbearance and extensions for fire survivors) and AB 2116 (small‑business lending protections) out of committee with amendments and referrals to Judiciary; supporters emphasized relief and enforcement, industry requested technical fixes.
The Senate Banking and Financial Institutions Committee advanced a package of bills addressing disaster relief and small‑business finance.
AB 1842 (presented by Assemblymember Herbedian) would establish a statewide framework triggering temporary mortgage forbearance when a federally declared major disaster renders homes uninhabitable and clarify repayment options. The author said committee amendments will limit triggers to federally declared major disasters, remove certain DFPI reporting requirements, and refine post‑forbearance repayment options. Supporters including local governments, community organizations and labor groups praised the bill as a tool to help homeowners avoid foreclosure after disasters.
AB 1847 (also presented by Assemblymember Herbedian) would extend existing forbearance relief for survivors of the Pacific Palisades and Eden fires. The author reported an agreement to reduce a proposed maximum extension from 36 months to 24 months and to require borrowers seeking an extension to attest under penalty of perjury that the property remains uninhabitable. Industry witnesses acknowledged progress but said institutional investor approval and servicer contract issues remain to be resolved.
AB 2116 (presented by Assemblymember Shiavo) seeks to bring merchant cash advances, factoring and certain nonloan commercial financing products under the California Financing Law and DFPI oversight. Supporters described predatory merchant cash advances and anecdotal examples of businesses burdened by high‑cost products; witnesses argued registration, disclosure and prohibitions on certain contractual practices would improve market transparency and enforcement. Some revenue‑based finance providers and trade groups requested clarifications on disclosure authority and asked for guardrails around an unconscionability standard to avoid chilling access to capital.
Committee action and next steps: Each bill was moved with amendments and referred to the Senate Judiciary Committee for further consideration. Committee members praised extensive negotiations that produced concessions and pledged continued work to resolve outstanding implementation and technical issues before subsequent hearings.
