California orders about 800 lenders to report how fast they released LA wildfire insurance money, due Oct. 29

California regulators on Thursday, Oct. 15, ordered the state's licensed mortgage lenders and servicers to report how they have handled insurance payouts for homes damaged or destroyed in the January 2025 Los Angeles-area fires.

The Department of Financial Protection and Innovation (DFPI) and the Business and Consumer Services Agency sent the demand to some 800 lenders and servicers. They have until Oct. 29 to respond.

Why lenders hold the money

When a mortgaged home burns, the insurance check typically does not go to the homeowner. The lender or servicer holds it and releases it in tranches as the home is rebuilt or repaired.

The Palisades and Eaton fires destroyed more than 11,000 single-family homes, and more than 16,000 homes and other structures overall. Very few have been rebuilt.

DFPI says it has received more than 160 complaints about payment delays and related problems since January 2025.

What the state wants to know

The data request covers loans inside the Eaton and Palisades fire perimeters. Lenders must report how many borrowers they received insurance proceeds for and how often they held those proceeds longer than 10 days.

It follows letters Gov. Gavin Newsom sent July 14 to the California Mortgage Bankers Association, the California Bankers Association and California's Credit Unions. Newsom complained of "unnecessary red tape and excessively withholding funds," and noted that some survivors had waited more than a month.

He also directed the state to track institutions that fail to release proceeds within 10 business days, fail to set up an expedited appeals process for disputed funds, or hold proceeds in excess of the outstanding mortgage balance.

"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 Business and Consumer Services Secretary Rohit Chopra.

Possible fines

DFPI Commissioner KC Mohseni said the department will take action, potentially including fines, against banks and credit unions that unnecessarily delay payouts. "It is critical that as homeowners and families continue to rebuild and recover, lenders do not stand in their way," he said.

No fines or enforcement actions have been announced against any lender. This round is a data demand.

The targets range from national banks such as Chase and online lenders such as Rocket Mortgage to regional banks and credit unions.

The industry's response

The California Mortgage Bankers Association said it will alert members to the reporting requirement and encourage them to evaluate whether they can process payments more efficiently.

"We will continue working with our members, the Governor's Office, and regulators to help survivors receive their insurance proceeds without unnecessary delay," CEO Paul Gigliotti said in a statement.

The group did not dispute the complaints in that statement.

Survivors are pressing harder. Joy Chen, executive director of Every Fire Survivor's Network, a nonprofit led by survivors of the fires, said lenders must release money promptly during rebuilding. "Every day that they wait to pay us, they're collecting interest," she said.

California already has a law on this point. Newsom signed a measure last year requiring banks and credit unions to pay homeowners interest on insurance payments they hold.

What the numbers will show

The 160 complaints are a floor, not a measure of the problem. No public figure yet shows how many fire-zone borrowers have had proceeds held beyond 10 days, or for how long. The Oct. 29 responses are meant to supply that.

The data will not by itself say how much of the slow rebuilding comes from lender holds. Other factors are in play, and the state has not quantified them.

The order also lands against a longer fight over who pays for California's wildfire losses. Newsom, nearly eight years into his tenure, pushed a plan in his final legislative session that would have required home insurers to bear more of the cost. The deal collapsed when lawmakers could not agree.

The next date to watch is Oct. 29. After that, DFPI will have lender-by-lender numbers, and Mohseni's fining authority will be tested for the first time.