California wildfire recovery and fund management

California is managing various financial and recovery challenges following devastating wildfires. In response to the 2025 Los Angeles-area fires, which destroyed over 16,000 structures, the California Business and Consumer Services Agency and the Department of Financial Protection and Innovation (DFPI) have ordered mortgage lenders to report on their handling of insurance payouts. This move follows more than 160 complaints regarding delays in survivors accessing funds necessary for rebuilding. Lenders have been given two weeks to submit these reports. This regulatory action follows a directive from Governor Gavin Newsom to collect data on lenders that take longer than 10 days to distribute proceeds without an expedition plan, as well as a law requiring banks and credit unions to pay interest on insurance payments they hold.

Separately, investigations have highlighted issues with the allocation of federal aid intended for wildfire victims. Approximately $369 million in HUD funds, originally designated to assist victims of the 2018 Camp and Woolsey fires, has been directed toward low-income housing developers. Critics note that these funds were used for dense housing projects without guarantees that wildfire survivors would benefit, while many victims from the 2018 fires continue to struggle with reconstruction or remain in temporary housing.

In Los Angeles, officials are considering Measure TE, a proposal to suspend the city’s 4% transfer tax for homeowners whose properties were damaged or destroyed by the Palisades fire. Under this measure, owners of high-value properties valued at more than $5.3 million would receive a full exemption if they sell their land within five years of the disaster. Local leaders are also discussing the creation of a Disaster Recovery District to funnel targeted funding into rebuilding projects.