The mortgage industry is very good at watching signals.
We watch rates like hawks. We track consumer sentiment all day long. We buy tools to tell us when to lock, when to float, when to sell, when to hedge and when to blink.
We invest in technology to improve speed, accuracy and workflow. We spend plenty on marketing to capture the consumer at the top of the funnel and even more trying to keep them engaged through the process.
In other words, we have built an entire ecosystem around watching what moves the market.
But there is one force that can increase costs, disrupt operations, reduce access to credit and confuse consumers — and somehow it still gets treated like an afterthought.
Mortgage advocacy. Or maybe more specifically, policy.
Policy is a business signal, not background noise
That is the irony. We obsess over market volatility but too often ignore regulatory volatility, even though it can hit just as hard — and sometimes harder. It affects consumers, access to credit and ultimately, the bottom line.
If rates move 50 basis points, everyone pays attention. If a bill moves through Sacramento that changes how forbearance must be administered during a declared emergency, half the industry shrugs until legal sends around a memo and operations start sweating.
That is backward.
Policy is not background noise. It is not just politics. It is a market signal. It is a business signal. And if you are not treating mortgage advocacy like part of your strategy, you are essentially driving while staring in the rearview mirror and calling it a business plan.
That is why I keep coming back to the same idea: Innovation in our industry cannot just mean better technology, faster workflows or shinier AI tools. Innovation also has to include advocacy.
Because if we want smarter laws, better outcomes and workable consumer protections, then the people writing the rules need input from the people who actually understand how the system works.
And right now in California, two bills moving through Sacramento are a perfect example of why that matters.
California’s latest bills show why mortgage advocacy matters
Let me be clear at the outset: California Mortgage Bankers Association (MBA) supports helping homeowners in times of crisis. We support disaster relief. We support policies that protect borrowers. Full stop.
But support for consumers should never mean support for policies that sound good and fail in practice. Those are not the same thing.
Assembly Bill (AB) 1842 and AB 1847 are both intended to expand mortgage relief during emergencies. The intent is understandable. The problem is that intent, by itself, does not run a servicing platform, align investor rules or create a clear path for a borrower trying to understand their options during a crisis.
AB 1842, the California Emergency Mortgage Relief Act, would expand existing disaster mortgage rules statewide any time a state of emergency is declared by either the Governor or the federal government. It would also impose new obligations that go well beyond current law.
AB 1842 could create conflict, delay and cost
On paper, that may sound proactive. In practice, mortgage servicing does not operate on vibes. It operates within a highly structured framework governed by federal law, investor requirements and contractual obligations. When you drop an additional layer of state-specific requirements on top of that structure, you do not create clarity. You create conflict.
AB 1842 would apply these requirements even in cases where the federal government has not issued an emergency declaration. That raises the likelihood of misalignment with federal agency guidance. The bill also adds timelines, notices, reporting requirements and compliance obligations, many of which already exist at the federal level in some form.
So now, instead of helping a borrower quickly, servicers may be forced to reconcile overlapping frameworks during the exact moment when speed and clarity matter most. That is not streamlined relief. That is a compliance obstacle course.
And as if that were not enough, AB 1842 creates a private right of action for technical violations. Also, as AB 1842 is currently read, a residential mortgage loan shall not be sold, assigned or otherwise transferred to another owner or managed by another mortgage servicer without the borrower’s written consent.
When legal risk rises, consumers pay the price
Accountability matters. But in a system this complex, a private right of action tied to technical compliance errors is like threatening to sue the pilot for turbulence while ignoring the thunderstorm. It may feel satisfying on paper, but it does not make the flight safer. What it does do is increase legal risk, increase operational hesitation and increase costs. And when costs and risks increase, access to credit has a funny way of moving in the opposite direction.
That impact does not stop with servicers. It flows through the broader market and eventually lands where it always lands: on the consumer. That is not a minor drafting issue. That is a flashing warning light.
AB 1847 may promise relief it cannot deliver
Then there is AB 1847, which focuses specifically on borrowers impacted by the Los Angeles wildfires. This bill would extend forbearance from 12 months to as much as 36 months. Again, the goal is understandable. We all want homeowners to recover. But wanting something and being able to operationalize it are not the same thing.
In many cases, servicers cannot offer extended forbearance beyond what the investor who owns the loan permits. If state law requires relief that investor guidelines do not allow, then we are creating a statutory promise that may not be deliverable in practice. And that is where good intentions become dangerous.
Because from the borrower’s perspective, the distinction between “required by statute” and “allowed by investor” is not just technical. It is deeply personal. It shapes expectations, recovery planning and trust. If the state tells a borrower one thing, but the actual loan structure only allows another, that is not relief. That is confusion dressed up as policy.
This is exactly why mortgage advocacy must become a bigger part of how our industry thinks about innovation.
Real relief starts with systems that already work
We are more than willing to invest in systems that help us monitor rates, capture leads and automate tasks. Good. We should. But if we are not equally committed to educating lawmakers on what can and cannot work in mortgage servicing, then we are leaving one of the most consequential variables in our business to chance. That makes no sense. Especially when the better path is sitting right in front of us.
If we really want disaster relief policies that help consumers, then we should be building on systems that already work. That means aligning with existing federal disaster relief programs, improving borrower outreach and education and focusing on the real barriers that slow recovery — things like permitting delays, rebuilding bottlenecks and the gap between insurance proceeds and actual reconstruction costs. In other words, let us solve the actual problem.
Because asking servicers to administer relief that conflicts with investor rules is like asking a contractor to rebuild a house with no permit, half the materials and instructions from three different architects. It is not innovation. It is confusion. And borrowers deserve better than confusion.
Mortgage advocacy is a strategic function
The broader lesson here is simple: Mortgage advocacy is not a side project for trade associations and government affairs teams. It is a strategic function. It is operational risk management. It is market intelligence. And if done correctly, it is one of the most important forms of innovation our industry has.
At California MBA, we are committed to working with policymakers to get this right. Not to block relief, but to build relief that is clear, implementable and capable of delivering what it promises.
Because in the end, the goal is not to pass bills that sound compassionate.
The goal is to create outcomes that actually are.
Paul Gigliotti is the President of the California MBA.
