California regulators on Thursday ordered the state’s licensed mortgage lenders and servicers to provide data on how they have handled the release of home insurance proceeds after complaints by January 2025 fire victims that their money was improperly withheld.
Insurance payouts for mortgaged homes damaged or destroyed by fires are typically not sent directly to homeowners but are held by lenders or servicers, who then disburse the funds in tranches as a home is rebuilt or repaired.
There were widespread complaints by survivors following the fires in Pacific Palisades, Altadena and nearby communities that destroyed more than 11,000 single-family homes that their reconstruction work was being held by up delays in getting the proceeds. The state Department of Financial Protection and Innovation has reported receiving more than 160 complaints.
The growing ire of homeowners prompted Gov. Gavin Newsom to send letters on July 14 to California Mortgage Bankers Association, the California Bankers Association and the California’s Credit Unions trade groups complaining about “unnecessary red tape and excessively withholding funds,” noting some survivors were waiting over a month for proceeds.
The letter noted that he had asked the DFPI and the Business and Consumer Services Agency to collect data on financial institutions that failed to release insurance proceeds within 10 business days, that failed to establish an expedited appeals process regarding disputed funds and that held proceeds in excess of the outstanding mortgage loan amounts.
Monday’s action ramps up the pressure on the institutions, which were sent a document by the DFPI demanding data about their loans in Eaton and Palisades fire perimeters. The data requested included the number of borrowers for which they have received insurance proceeds after the fires and how often they had held proceeds longer than 10 days.
“It’s unacceptable that after running through a gauntlet of paperwork to file insurance claims, some wildfire survivors still have not gotten access to the funds they need to rebuild,” said California Business and Consumer Services Secretary Rohit Chopra in a statement Thursday.
California has more than 400 licensed home lenders, which include large national banks such as Chase, online lenders including Rocket Mortgage, and regional and community banks, as well as credit unions. The institutions have until Oct. 29 to respond to the data request.
The California Mortgage Bankers Association and California’s Credit Unions did not immediately respond to messages for comment, while the California Bankers Association pointed to a press release it had issued last summer in response to Newsom’s July letter.
“We recognize that many fire survivors still face real challenges in their path to recovery, and we are committed to working closely with the Governor’s administration and other stakeholders who are vital to the rebuilding and recovery effort to address these concerns and advance meaningful solutions,” the statement said .
Paul Gigliotti, chief executive of the California Mortgage Bankers Association, said the group is reaching out to mortgage services to ensure they are aware of the regulations regarding insurance proceeds and “encouraging them to review their staffing, inspection practices, disbursement timelines, and appeal processes so requests are handled efficiently and transparently.”
“Servicers and survivors share the same goal of getting homes rebuilt. Completing construction allows families to get back on their feet and move forward with their lives,” he said in a statement.
The delay in payments also led to the passage of Assembly Bill 493, authored by Assemblymember John Harabedian, (D-Pasadena), who represents the Eaton fire zone. It requires mortgage lenders that hold insurance proceeds during rebuilding to pay at least 2% annual simple interest. The law was signed by Newsom in August 2025.
“Financial institutions have a critical role to play as families move from immediate stabilization to rebuilding their homes, their businesses, and their lives. The last thing survivors need is unnecessary red tape, delays, and barriers standing between them and the relief they deserve,” Newsom said in a statement Thursday.
Harabedian also has authored legislation that requires services to provide mortgage relief to January 2025 fire victims whose homes were destroyed or left uninhabitable.
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