Opinion: How home lenders are impeding Californians from rebuilding fire-torn L.A.

Like thousands of other families in January we lost our Pacific Palisades home to wildfire Within minutes every house on our side of the street was reduced to ashes while those across the street were left untouched Five months later the harsh realities of recovery have set in We are entangled in a bureaucratic maze FEMA the EPA Army Corps of Engineers IRS and a patchwork of state and local agencies Our home was covered by two insurance policies one through California s FAIR Plan and one through a private company but the multiple federal state and private agencies don t coordinate Even getting someone on the phone can take hours It s turned seeking information into a part-time job To their credit largest part regime employees have been courteous and helpful But the private sector has been another story For example we ve been approached by opportunists offering to file simple forms that require no negotiation for a cut In our scenario there s nothing to negotiate The home is gone and the settlement is fixed Our worst experience however has been with our mortgage company Soon after the fire the insurer issued a settlement check but it was made out to us and the mortgage lender Following instructions we endorsed the check and mailed it in for co-signing Instead the lender cashed it and kept the money Now they re demanding a mountain of paperwork permits architectural plans contractor invoices before releasing any funds They refuse to let us use our insurance settlement to pay for the very services required to begin rebuilding Meanwhile they earn interest on our money The longer the delay the more they profit We re not alone A large number of fire casualties are trapped in the same situation Assemblymember John Harabedian with encouragement from Gov Gavin Newsom introduced rule requiring lenders to pay back any interest earned on withheld insurance proceeds to homeowners The logic is simple If they delay disbursement intended for rebuilding what was lost they should not profit from a catastrophe Are these tactics legal Technically yes Like plenty of homeowners we signed a flurry of complex documents while refinancing a clause naming the lender as a co-payee on insurance asserts buried among them It was not made clear to us that this allows them to hold the funds in escrow and release them at their discretion Related Articles What does the future hold for the California Democratic Party Modest psychedelic research bill dies in California Senate committee Modest psychedelic research bill dies in California Senate committee They stated it Putting the brakes on classic car smog-check breaks Taves No one s in charge Newsom must fill California s homelessness leadership vacuum But California law requires that lenders act in good faith by not unreasonably withholding funds State civil code makes this clear A California appellate court ruling in Schoolcraft v Ross reaffirms the lender s responsibilities Harabedian s bill could make a real difference In the Palisades numerous homes were insured for more than million At interest that s a year up to over the four years it can take to design permit and rebuild a home People often ask how they can help Here s one answer Contact Harabedian Newsom and other state lawmakers California leaders need to be reminded that the exploitation of tragedy survivors must stop Losing your home to wildfire is devastating Losing your insurance settlement afterward is unconscionable Robert Kaplan is a senior scholar at the Stanford School of Medicine Margaret Gaston is the retired founder and president of the Center for the Future of Teaching and Learning They wrote this column for CalMatters