{"id":402231,"date":"2026-07-17T13:29:16","date_gmt":"2026-07-17T13:29:16","guid":{"rendered":"https:\/\/www.newsbeep.com\/us-ca\/402231\/"},"modified":"2026-07-17T13:29:16","modified_gmt":"2026-07-17T13:29:16","slug":"fire-survivors-were-finally-ready-to-rebuild-a-new-barrier-is-leaving-them-demoralized","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us-ca\/402231\/","title":{"rendered":"Fire survivors were finally ready to rebuild. A new barrier is leaving them ‘demoralized’"},"content":{"rendered":"\n

More than a year after the Eaton fire devastated their community, returning to their beloved Altadena neighborhood finally seemed within reach for Baba Singh and his family.<\/p>\n

They had secured their insurance payout, gotten rebuilding plans approved and hired a contractor. <\/p>\n

But then their mortgage company started withholding the couple\u2019s insurance money it held in escrow \u2014 allocated specifically for the rebuild. The inaccessible cash continues to threaten their family\u2019s ability to continue construction. <\/p>\n

\u201cWe\u2019re literally being denied money that doesn\u2019t belong to them,\u201d Singh said of his mortgage company. \u201cIt\u2019s just so demoralizing at this point.\u201d<\/p>\n

The frustrating situation comes on top of mounting financial strain and housing instability<\/a> for many fire survivors who are trying to rebuild their homes and lives after the 2025 firestorms. Local and state officials worry the mortgage payout delays could further stymie what\u2019s become an already slow recovery<\/a>. <\/p>\n

\"Two <\/p>\n

\u201cWe\u2019re literally being denied money that doesn\u2019t belong to them,\u201d Baba Singh, left, said. \u201cIt\u2019s just so demoralizing at this point.\u201d<\/p>\n

(Ronaldo Bola\u00f1os \/ Los Angeles Times)<\/p>\n

This week, Gov. Gavin Newsom called on mortgage companies to better support fire victims, calling \u201csurvivors\u2019 ability to access the insurance coverage they\u2019ve paid for … foundational to recovery.\u201d <\/p>\n

\u201cI am concerned that too many financial institutions are not providing fair and fast access to insurance proceeds,\u201d Newsom wrote in a letter<\/a> to associations representing California banks, credit unions and mortgage lenders. \u201cThe state has received dozens of reports of servicers holding funds in excess of the unpaid principal balance in clear violation of federal guidelines.\u201d<\/p>\n

Under most mortgage agreements, lenders have the authority to administer a home\u2019s insurance payout, a process that is supposed to ensure the funds are used to restore the value of the property \u2014 of which the lender has a vested financial interest. <\/p>\n

Typically lenders release installments of the insurance funds as construction progresses. But both local and state officials say the process isn\u2019t playing out as it\u2019s set up. <\/p>\n

Newsom said \u201ctoo many fire survivors are reporting that lenders and servicers are adding unnecessary red tape and excessively withholding funds.\u201d Many residents also pointed out that the longer these financial firms hold on to the cash, the more interest they can earn on the funds. <\/p>\n

\u201cIt\u2019s one of those things where people are like, \u2018What do you mean nobody\u2019s addressed this?\u2019\u201d said Demetrius Gray, public insurance adjuster who has taken on dozens of pro-bono cases from the Eaton and Palisades fires. \u201cPeople have widely reported on insurance companies [shortfalls]. \u2026 But this mortgage issue is the issue.\u201d<\/p>\n

Newsom said he\u2019s directed the state\u2019s Department of Financial Protection and Innovation \u201cto resolve consumer complaints about lenders holding excess funds,\u201d and urged homeowners to file a complaint online<\/a> so the state can better track and respond to such issues. The department told The Times it has already received more than 120 complaints.<\/p>\n

But some who have gone through that process, including Singh, haven\u2019t found the results fruitful, though they reported that the department did put some additional pressure on lenders. <\/p>\n

Many in this position are finding there are few consequences for lenders that delay or deny disbursements, forcing fire survivors to try to adhere to lenders\u2019 complicated rules and appeals processes \u2014 all while costs mount.<\/p>\n

Paul Gigliotti, the chief executive of the California Mortgage Bankers Assn., said his organization is taking these concerns seriously, but provided few specifics on solutions.<\/p>\n

\u201cWe are in direct communication with members, encouraging them to review their policies, staffing, inspection practices, borrower communications, disbursement timelines and determination processes, and escalation procedures,\u201d Gigliotti said in a statement. \u201cWe understand and appreciate the need to ensure requests are handled as efficiently, consistently and transparently as possible.\u201d<\/p>\n

\"Two <\/p>\n

\u201cI\u2019ve contacted every regulatory agency I can think of,\u201d said Singh. \u201cWe\u2019re stuck. … But then again, none of us in west Altadena have expected much help from anyone in charge in California since the night of the fire.\u201d<\/p>\n

(Ronaldo Bola\u00f1os \/ Los Angeles Times)<\/p>\n

Though a flurry of legislation has been passed to aid fire survivors<\/a> \u2014 including a new law<\/a> that requires financial institutions to pay homeowners at least 2% of the interest earned on insurance payouts held in escrow \u2014 nothing has directly addressed how mortgage companies should disperse insurance money, Gray said. <\/p>\n

\u201cThere are no rules around this … and the advantage is all theirs,\u201d Gray said of mortgage lenders. \u201cIt literally is the Wild West.\u201d<\/p>\n

California Business and Consumer Services Secretary Rohit Chopra said that<\/a> state officials are focused on tracking financial firms that fail to make fair and timely payments, so officials can then consider \u201cenforcement under state and federal consumer protection laws.\u201d A spokesperson for the Department of Financial Protection and Innovation also pointed out that the California Residential Mortgage Law Act prohibits a mortgage lender from engaging in \u201cunfair, unlawful, and deceptive business acts,\u201d and if one is found in violation, the department could issue an order to stop or seek discipline against the lender license. But so far, the department has only \u201cdirectly addressed [complaints] with the lender,\u201d the spokesperson said.<\/p>\n

But Gray said those pathways have little teeth, particularly after the Consumer Financial Protection Bureau has been gutted<\/a> under the Trump administration. He said mortgage companies withholding insurance funds has become an issue across the nation after disasters.<\/p>\n

Assemblymember John Harabedian (D-Pasadena), who represents Altadena and sponsored the bill that now requires mortgage lenders to share their earned interest from these withheld funds, applauded Newsom\u2019s focus on this issue but acknowledged that \u201cmore must be done.\u201d <\/p>\n

These lenders \u201chave a responsibility to be responsive, communicate clearly, and guarantee that the rebuilding process is not slowed by unnecessary administrative barriers,\u201d Harabedian said. I \u201clook forward to working with [Newsom] to ensure accountability.\u201d <\/p>\n

Several families trying to rebuild<\/a> told The Times that their mortgage lenders continue to provide them misleading requirements and little clarity for how and when they will disperse their insurance funds, often giving only vague denials, delays and constantly changing benchmarks.<\/p>\n

\u201cI\u2019ve contacted every regulatory agency I can think of,\u201d said Singh, a clinical psychologist. \u201cWe\u2019re stuck. … But then again, none of us in west Altadena have expected much help from anyone in charge in California since the night of the fire, when they didn\u2019t even bother to warn us our town was burning<\/a>.\u201d<\/p>\n

\"A <\/p>\n

A contractor cleans up his equipment for the day after working on the half-built Altandena home of the Singh family.<\/p>\n

(Ronaldo Bola\u00f1os \/ Los Angeles Times)<\/p>\n

Still, after raising several alarms \u2014 including filing complaints with the state\u2019s Department of Financial Protection and Innovation, connecting with Better Business Bureaus in different states and even reaching out to The Times \u2014 Singh said his mortgage company did decide last week to disperse a new tranche of cash, about $62,000, and then promised another one soon. It was enough to keep their construction going \u2014 for now.<\/p>\n

At this point in their construction, the couple\u2019s lender, Onity Mortgage, is now withholding only about $75,000 of their insurance payout, but Singh called it an amount that remains crucial for them. Until they use up all their insurance money, they can\u2019t access their federal Small Business Administration loan, another batch of funding they need to get to the finish line. Like many fire survivors, he found out they were woefully underinsured after the disaster. <\/p>\n

But Onity hasn\u2019t yet provided a clear process for when it will release the last of Singh\u2019s funds. He\u2019s been told their house needs to be 75% or 80% completed, but he doesn\u2019t know how they can get to that point without that cash \u2014 even if the company was assessing their progress properly. <\/p>\n

\u201cIt\u2019s frustrating because it\u2019s our money!\u201d said Marcy Harbut, Singh\u2019s wife. \u201cWhy do they have any say?<\/p>\n

In a statement, Onity Mortgage declined to discuss specifics of the couple\u2019s case, but said it has been \u201cactively working\u201d with Singh. <\/p>\n

\u201cAs is standard practice, insurance proceeds for properties with mortgage liens are released in stages based on the progress of repairs and the results of property inspections designed to verify completed work and protect all parties involved,\u201d Onity spokesperson Derek Cuculich said in a statement. \u201cWe remain committed to helping facilitate the timely disbursement of insurance proceeds as requirements are met.\u201d<\/p>\n

Other families in Altadena and the Palisades have run into similar issues with lenders holding the funds they need, many describing arbitrary progress reports, confusing requirements and, in one case, a refusal to release funds because the planned rebuild is smaller than the initially mortgaged home.<\/p>\n

Richard Sloop is among them, but he\u2019s been determined to find a way to make it work. His mortgage lender has provided him several different rebuild benchmarks he must hit before he can receive any insurance money.<\/p>\n

First it was 33% built. Then it was 37%. Another time it was 46.99%, he said. <\/p>\n

He estimates his home is well over 50% completed now, but the company hasn\u2019t acknowledged that. <\/p>\n

\u201cThey have not released any rebuild funds,\u201d Sloop said. \u201cI started paying out of pocket to get this thing going. … I\u2019m getting ready to send a letter to the attorney general.\u201d<\/p>\n

He\u2019s hoping that state officials will actually step in and step up soon, because despite his determination, he\u2019s not sure how much longer he can fund the project on his own. <\/p>\n

\u201cWe need the money, as everyone does,\u201d Sloop said. \u201cThis is terrible.\u201d<\/p>\n

Singh and his wife have already borrowed thousands from family members to keep the rebuild on schedule and spent hours on the phone with their mortgage company. Now they\u2019re considering tapping into retirement their savings.<\/p>\n

\u201cWe\u2019re exhausted and we want to go home,\u201d Singh said.<\/p>\n","protected":false},"excerpt":{"rendered":"More than a year after the Eaton fire devastated their community, returning to their beloved Altadena neighborhood finally…\n","protected":false},"author":2,"featured_media":402232,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[27],"tags":[161410,88029,6246,161413,3288,6228,1073,161412,131460,48,52,51,47,50,49,161411,161409,3290,5968,225,7827],"class_list":["post-402231","post","type-post","status-publish","format-standard","has-post-thumbnail","category-los-angeles","tag-baba-singh","tag-consumer-complaint","tag-department","tag-financial-protection","tag-fire-survivor","tag-fund","tag-home","tag-insurance-money","tag-insurance-payout","tag-la","tag-la-headlines","tag-la-news","tag-los-angeles","tag-los-angeles-headlines","tag-los-angeles-news","tag-mortgage-company","tag-mortgage-lender","tag-newsom","tag-process","tag-state","tag-state-official"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts\/402231","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/comments?post=402231"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts\/402231\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/media\/402232"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/media?parent=402231"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/categories?post=402231"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/tags?post=402231"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}