SACRAMENTO, Calif. — California regulators have ordered mortgage lenders, including banks and credit unions, to report on how they have handled insurance payments to survivors of the 2025 Los Angeles-area wildfires, following more than 160 complaints about delays and other problems involving the release of funds.
According to The Associated Press, the California Business and Consumer Services Agency and the Department of Financial Protection and Innovation (DFPI) announced the action Thursday, giving lenders two weeks to submit reports detailing their handling of insurance proceeds intended to help homeowners rebuild.
The state is seeking to accelerate the distribution of insurance payments that lenders hold before releasing them to borrowers whose properties were damaged or destroyed.
DFPI said it has received more than 160 complaints involving delayed payments or other issues since January 2025.
“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 Rohit Chopra, secretary of the Business and Consumer Services Agency.
Thousands of Homes Destroyed
The Palisades and Eaton fires destroyed more than 16,000 homes and other structures in residential communities across the Los Angeles area. According to the AP, relatively few homes have been rebuilt.
In July, Gov. Gavin Newsom sent a letter to banking associations and credit unions expressing concerns that some mortgage lenders were holding insurance proceeds for weeks before releasing the money to homeowners.
Newsom directed state officials to collect information about lenders taking longer than 10 days to distribute insurance payments and failing to develop plans to accelerate the process.
The governor also signed legislation last year requiring banks and credit unions to pay homeowners interest on insurance proceeds held by the institutions.
“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 announcing the latest action.
Regulators Warn of Potential Fines
DFPI Commissioner KC Mohseni warned that financial institutions found to be unnecessarily delaying insurance payments could face regulatory action, including fines. “It is critical that as homeowners and families continue to rebuild and recover, lenders do not stand in their way,” Mohseni said in a statement.
The reporting requirement comes amid broader disputes in California over who should bear the financial costs of increasingly destructive wildfires.
According to the AP, Newsom, who took office in 2019 shortly after the deadly Camp Fire, has spent much of his administration addressing wildfire-related financial liability, including the costs associated with fires caused by utility equipment.
During his final legislative session as governor, Newsom backed a proposal that would have required homeowners insurers to shoulder a greater share of wildfire costs. However, the proposal collapsed after lawmakers failed to reach an agreement.
The latest regulatory action focuses specifically on mortgage lenders’ handling of insurance proceeds, with state officials emphasizing that delays in distributing the funds can create additional obstacles for homeowners attempting to repair or rebuild their properties.
