Pleasanton, California — Gov. Gavin Newsom warned mortgage lenders against needlessly delaying or denying insurance funds to survivors of the Los Angeles firestorms, more than 18 months after the Eaton and Palisades fires.
In a letter to groups representing banks, credit unions, and mortgage lenders, Newsom said too many survivors report that lenders add red tape by slowing the release of insurance money held in escrow during rebuilding. He directed the new Business and Consumer Services Agency and the Department of Financial Protection and Innovation to collect complaints, warning the practices may violate consumer protection laws.
The governor also joined CAL FIRE and the Governor's Office of Emergency Services in clarifying that a home's classification in the state's Damage Inspection database is not a basis for denying or delaying insurance proceeds. Insurers must review each claim independently of state damage assessments, the state said.
Across Los Angeles County, more than 11,000 detached homes and 13,000 additional housing units were either heavily damaged or lost, with nearly 2,500 homes now under construction. A recent survey cited financial barriers as the most common obstacle to recovery, with 30% of survivors pointing to delayed or insufficient insurance payouts.
