As deadly wildfires continue to make their way through Los Angeles and the surrounding area for the second week in a row, homeowners, concerned about the possibility of defaulting on their mortgages in the wake of the unprecedented disaster, have been offered some relief from the nation's major lenders.
Fannie Mae and Freddie Mac on Monday unveiled assistance and relief options for customers suffering from historic Southern California wildfires.
Both government-backed companies offer 12-month forbearance plans, meaning defaulting homeowners can either reduce or suspend their mortgage payments for up to a year without incurring late fees, foreclosure, or other types of legal action.
In cases where a homeowner fails to contact a lender, mortgage servicers are allowed to offer a forbearance plan for up to three months if they believe the home has been affected by a disaster.
“We are committed to supporting homeowners, renters and communities in need during this difficult time,” Cindy Danko, senior vice president of single-family and chief credit officer at Fannie Mae, said in a statement. “If homeowners are affected by the fires, we encourage them to contact their mortgage servicer for assistance as soon as possible.”
Even after the forbearance period ends, homeowners can apply for a payment plan, payment deferral, or loan modification to avoid falling behind on their mortgage, according to the companies.
“The first priority for those affected by the devastation of these ongoing wildfires is to get to safety,” said Mike Reynolds, Freddie Mac Family Vice President and Chief Service Officer. “Freddie Mac and our partners stand ready to provide immediate assistance and aid in the recovery of families and individuals.”
A late mortgage payment can have serious financial consequences, including escalating late fees, a lowered borrower's credit score, and mortgage foreclosure.
Homeowners are encouraged to contact their mortgage servicers, or reach out to Fannie Mae and Freddie Mac by phone or on their websites, to learn how to apply for assistance.
Private lenders are providing relief
Some private lenders have followed the lead of Fannie Mae and Freddie Mac in providing assistance to those affected by the disaster unfolding on the West Coast.
Chase Home Lending, a division of JPMorgan Chase, offers a three-month forbearance program, which can be extended in three-month increments for up to 12 months. However, borrowers have the option to extend the relief window beyond the one-year mark.
Stay up to date with NYP's coverage of terrifying fires in the Los Angeles area
Bank of America also said it has a program that includes mortgage forbearance options tailored to its customers' needs.
Separately, Wells Fargo has pledged $1.3 million from its foundation to support wildfire relief efforts, a company spokesperson said Monday.
Property taxes and mortgage payments are inevitable
The bad news is that wildfire victims whose homes were severely damaged or even reduced to ashes are still on the hook for mortgage payments and property taxes.
In some cases, lenders add property taxes to borrowers' monthly mortgage payments.
Under this arrangement, the customer pays a twelfth of their annual property tax bill in addition to their mortgage payment, according to Experian.com.
This amount is deposited into an escrow account, which the lender then uses to pay property taxes to the county on behalf of its clients by the due date.
While the value of the home may be significantly reduced, or even voided, depending on the extent of the damage, the land the home is built on may still be worth a lot of money, especially in high-priced areas like Pacific Palisades. and Malibu, according to Los Angeles County Tax Assessor Jeff Prang who spoke to KTLA this week.
Prang said his office will reduce assessments and taxes on the property but not on the land.
If the home is later rebuilt, it will likely regain its pre-fire value, but that depends on factors such as the real estate market and the quality of repairs.
The good news is that homeowners whose property sustained more than $10,000 in damage can qualify for a tax break if they file a misfortune or disaster relief claim within 12 months of the incident through Prang's office.
Dangerous winds threaten Los Angeles
Meanwhile, wildfires continued in and around Los Angeles on Thursday, driven by dangerous Santa Ana winds.
So far, the fires have killed at least 25 people, burned more than 40,600 acres and wiped out more than 12,300 structures, including countless homes, according to Cal Fire.
The Palisades Fire, the most destructive blaze that wiped out the starry coastal community of Pacific Palisades last week, is 19% contained, while the Eaton Fire burning outside Pasadena, California, is 45% contained.
Los Angeles County Sheriff Robert Luna warned that the death toll could rise, considering that nearly 30 people are still missing.
Just under 90,000 residents in the region are still under evacuation orders, half the number recorded last week.
Gusty winds of up to 65 mph in some areas threatened to spread the flames faster and carry embers miles away, potentially hampering emergency crews' efforts to put out the fires.
The National Weather Service issued a rare “particularly dangerous situation” advisory for parts of Los Angeles and Ventura counties through Wednesday afternoon.
However, the winds are expected to finally die down on Thursday, offering the 22,000 firefighters battling the horrific inferno a welcome reprieve.
“This is actually the final push of these winds here today,” National Weather Service meteorologist Todd Hall said. “Hopefully, if we get through today, we'll get some better conditions late in the week, especially Friday and Saturday.”
