Los Angeles fires have destroyed tens of thousands of residential and commercial buildings, many of which were still under mortgage payments. How will struggling homeowners or business owners handle their outstanding loans? What assistance is available from federal and state governments?
Last Saturday (18th), Governor Newsom announced that California has partnered with five major banks in the United States to provide mortgage relief and tax breaks for Los Angeles fire victims. The Small Business Administration (SBA) and the Federal Emergency Management Agency (FEMA) have also offered various emergency relief measures for the affected residents.
The five lending institutions involved in the commitment are Bank of America, Citi, JPMorgan Chase, Wells Fargo, and U.S. Bank. These institutions have committed to providing a 90-day moratorium on mortgage payments for homeowners impacted by the fires, will not report late payments to credit agencies, and offer additional relief opportunities.
Newsom hopes that these financial measures to protect homeowners will help residents focus on addressing their immediate needs without the added pressure of mortgage payments.
In addition, the California government has collaborated with the California Bankers Association, California Credit Union League, California Mortgage Bankers Association, and others to gain support for disaster relief efforts.
The primary relief measures provided by the five banks and other financial institutions include a 90-day moratorium on mortgage repayments, a simplified application process without the need for forms or documents, and options like no immediate repayment of outstanding amounts after the moratorium period ends, along with additional relief opportunities.
During the 90-day moratorium, penalties related to mortgage payments will be waived. There will be at least a 60-day moratorium on new foreclosures or evictions. The lending institutions will not report overdue payments to credit agencies.
Residents in the 13 zip code areas, including 90019, 90041, 90049, 90066, 90265, 90272, 90290, 90402, 91001, 91104, 91106, 91107, and 93536, are eligible for these relief policies.
Furthermore, Newsom has issued multiple executive orders to aid in community rebuilding and recovery, constructing more temporary housing, and protecting survivors from exploitation and price fraud.
Due to the impact of the fires, the personal tax filing deadline for Los Angeles County taxpayers has been extended to October 15th, and the deadline for sales or use tax filings has been extended to April 30th, with significant tax breaks for businesses.
To expedite post-disaster reconstruction efforts, Newsom has also issued an executive order suspending permit and review requirements under the California Environmental Quality Act and California Coastal Act. The construction process for Accessory Dwelling Units (ADUs) has been streamlined, allowing for more temporary trailers and other housing options, and the fees for moving trailer parks have been suspended.
The SBA announced low-interest federal disaster loans for the four counties in Southern California directly impacted by the fires.
The assistance provided by the SBA includes Economic Injury Disaster Loans (EIDL), where small businesses, small agricultural cooperatives, or individual non-profit organizations can apply for loans up to $2 million, even if there is no physical damage. These loans can be used to pay fixed debts, payroll, accounts payable, and other expenses.
Homeowners can access disaster loans of up to $500,000 for repairing or rebuilding damaged homes. Both homeowners and renters are also eligible for loans up to $100,000 to repair or replace damaged personal property, including vehicles.
The interest rate for these loans for small businesses is as low as 4%, for PNP organizations as low as 3.625%, and for homeowners and renters as low as 2.563%, with terms of up to 30 years. Loan amounts and terms are determined by the SBA based on the financial situation of the applicant, with repayment deferred for 12 months before interest accrual begins.
FEMA is also providing assistance to residents in disaster areas. In addition to $43,600 in housing assistance, residents can apply for additional temporary rental assistance based on current rental prices in the community and household size.
Furthermore, those who receive assistance from the agency are automatically eligible for a supplemental $10,000 grant from California for disaster victims, which can be used for rent, home repairs, rebuilding, replacing personal property, medical expenses, etc.
Applicants can also receive a maximum of $43,600 in supplemental grants from FEMA for necessities such as vehicles, medical needs, and more.
FEMA is also providing one-time Special Needs Assistance of $770 for individuals affected by the disaster to cover urgent needs like food, water, hygiene, transportation, etc.