Mortgage forbearance during a Palisades fire rebuild: pause the payment without wrecking your credit

A mortgage doesn’t auto-pause when the house burns. Most Palisades families lose their home and then keep paying $6,000-$15,000/month on a property they can’t inhabit, while also paying rent on a temporary place.

Federal disaster-declaration forbearance lets you pause that mortgage payment for up to 12 months (sometimes longer) without missing any actual payments — and without hitting your credit report.

Here’s how to request it.

How federal disaster forbearance works

Eligibility: the property must be in a federally-declared disaster area (Palisades + Eaton fires both qualify) AND you must have a federally-backed mortgage. That covers:

- Fannie Mae / Freddie Mac conforming loans (the vast majority of mortgages under $1.5M)

- FHA loans

- VA loans

- USDA loans

Coverage gap: jumbo loans through private banks aren’t auto-covered. Many lenders extend equivalent forbearance voluntarily but you have to ask, and the terms can be less favorable. Most Palisades mortgages are jumbo — confirm your lender’s policy.

Duration: up to 12 months, often extendable to 18 months for severe-disaster cases.

Credit impact: properly documented forbearance does NOT report as delinquency. Lenders code it as ‘disaster forbearance’ with the credit bureaus. Your score stays put.

How to request it

1. Call your servicer’s ‘loss mitigation’ or ‘disaster assistance’ line. Don’t use the general customer-service line — that team often doesn’t know about disaster forbearance.

2. Reference the FEMA disaster declaration number. Palisades / Eaton fires are FEMA-4856-DR-CA (verify current number at fema.gov).

3. Request written confirmation of the forbearance terms. Specifically: duration, whether deferred payments are added to the end of the loan (the standard) or capitalized (worse), what reporting code is used with credit bureaus.

4. Get the agreement in writing before stopping payments. Verbal ‘you’re approved’ without a written agreement leaves you exposed. Don’t skip a payment until the written agreement is in hand.

What forbearance is NOT

It’s not loan forgiveness. Every paused payment still owes — they get added to the back of the loan, paid as a lump sum at the end, or refinanced into the loan’s remaining term. The exact structure varies by servicer.

It’s not a rate reduction. Interest accrues normally during forbearance. The pause is on payments, not on interest.

It’s not automatic. You have to request it. Servicers don’t volunteer.

After forbearance ends — your options

1. Lump sum payback. Pay all paused payments at the end of the forbearance window. Rare; most families can’t.

2. Loan modification. Servicer adds the paused payments to the principal and extends the loan term. Standard for federally-backed loans.

3. Repayment plan. Spread the paused payments over 6-12 months on top of resumed regular payments. Doable but tight.

4. Deferral. Paused payments become a non-interest-bearing balloon at the end of the loan. Best option — Fannie / Freddie offer this.

What to do if your lender refuses

Step 1: escalate to a supervisor. Junior reps sometimes don’t know the disaster-assistance protocols.

Step 2: file a complaint with the CFPB at consumerfinance.gov. Federally-backed mortgages MUST offer disaster forbearance; refusal is a regulatory issue.

Step 3: for jumbo / non-conforming loans, request voluntary forbearance and reference the lender’s public commitment to fire-affected borrowers. Most major California lenders made public commitments after the Palisades fire. Use them.

If you want help figuring out which forbearance approach fits your loan + your timeline, book a free consultation. We coordinate the conversation with your servicer so you don’t go in cold.