After the LA fires, Mortgage Companies Promised to Give Devastated Homeowners a Break. Some Have Not

This article was originally published June 30, 2025 on laist.com.

After January’s fires destroyed 16,000 structures in Los Angeles County, hundreds of banks signed up for a state-run program designed to help homeowners who lost everything.

Mortgage companies agreed to let borrowers delay their monthly payments for 90 days — without demands for full repayment at the end of the forbearance period.

But some homeowners are now telling LAist their banks are not following the state’s rules. California regulators and legal aid attorneys confirm that homeowners are facing demands for swift repayment.

Some borrowers have seen their credit scores plummet. Mortgage companies have even told borrowers if they don’t catch up quickly, they could lose their homes.

Aimee Williams, a housing rights attorney for the legal aid nonprofit Bet Tzedek, said some mortgage companies are not abiding by the terms of the state’s relief program. When homeowners bring up the program in conversation with their mortgage servicers, Williams said, some companies aren’t budging.

“We are seeing reports from homeowners from Altadena, from the Palisades, who are telling us, I asked them about that, and they said, ‘We don't care about the disaster relief. Pay up,’” she told LAist.

How the program was supposed to work

When Gov. Gavin Newsom announced the mortgage relief program in January, he said banks had agreed to give 90 days of mortgage forbearance to thousands of families who lost homes.

More than 400 financial institutions signed up, saying they would not charge late fees, would not report late payments to credit agencies and would not demand “balloon payments,” which require borrowers to pay back their entire balance right at the end of the forbearance period.

Upon the end of the forbearance period, mortgage companies could work out a payment plan to allow homeowners to catch up over time or place the missed months on the back end of the borrower’s mortgage.

The governor thanked the banks for voluntarily agreeing to the state’s relief terms in a news release rolling out the program.

“These financial protections will enable residents to concentrate on taking care of their immediate needs rather than worrying about paying their mortgage bills,” Newsom said.

Cracks in the relief program are starting to show

Homeowners displaced by the fires say they are getting forbearance. Some have obtained six months of relief, rather than the program’s minimum of 90 days.

But for many, the forbearance period has come to an end. And despite signing on to the relief program, some mortgage companies have demanded that homeowners catch up on all their missed payments — or risk losing their properties.

Looking over the patch of dirt where her family’s home of 21 years once stood, Lisa Mason is still stunned by how odd the scene looks.

“It's weird,” she said. “It looks so much smaller than what it was. I mean, you just look at it and you're like, ‘What is this? Just a little lot.’”

Mason said her family is determined to rebuild, but her mortgage company is not making it easy. When she first heard about the 90-day forbearance program, she didn’t trust it.

“So I said, ‘Absolutely not. Do not stop my automatic withdrawals,’” Mason recalled telling her mortgage company, Select Portfolio Servicing (SPS).

But her payments were delayed after all. In the chaos of getting back on her feet, Mason didn’t realize she had missed three months on her mortgage — until SPS told her to pay it all back by May 27.

“They sent me a letter… saying, basically, if you don't take action, it's very possible you're going to lose your home,” Mason said.

The letter she received said if she blew the May 27 deadline, “SPS may initiate foreclosure” and “you may lose your home.”

How mortgage troubles could affect rebuilding plans

Around the same time, Mason saw her credit score take a nosedive.

“I see it drops by 120 points because they went ahead and also reported us 90 days late,” she said.

Mason was already worried about the cost of rebuilding. She said she couldn’t afford to have bad credit. So she paid off the balance, even though she felt pretty sure the state’s mortgage relief program was supposed to prevent something like this.

“I said, ‘But do you realize this is against the moratorium? That we've just had a disaster?’” she recalled telling an SPS representative over the phone. “‘We can't speak to that. Are you going to pay it or not?’ That was their response.”

Mason said the experience has made her trust banks even less. She said actions like this might help explain why so many of her neighbors have already sold and left Altadena.

“It's just dumbfounding,” she said. “How can you do this to people during a tragic time like this?”

How state officials are responding to complaints

Select Portfolio Servicing is one of the more than 400 financial institutions who signed on to the state’s mortgage relief program, according to the website of the California Department of Financial Protection and Innovation (DFPI).

LAist emailed and called SPS multiple times to ask about their compliance with the state’s rules, but the company did not respond.

DFPI officials told LAist they are “aware of isolated instances where consumers were asked to make balloon payments.”

The department declined to release in-depth data on mortgage complaints in response to a public records request filed by LAist. Officials said they have received 121 complaints related to issues such as credit reporting, forbearance terms and insurance payouts since the L.A. fires.

“DFPI has established a dedicated task force to manage complaints related to the Los Angeles fires and is working hard to support consumers throughout the dispute resolution process,” said Daniel Emmons in the department’s emailed response to LAist’s questions.

Dispute resolution does not involve fines against financial institutions who break the rules, officials said, because banks are participating in the post-fire mortgage relief program on a voluntary basis.

Emmons went on to say, “DFPI will continue working with mortgage lenders and servicers to ensure that borrowers are not misled or subjected to unlawful, unfair, deceptive or abusive practices.”

LAist also reached out to the governor’s office, but did not receive a response.

What to do if you’re facing mortgage troubles after the fires

Aimee Williams, the Bet Tzedek attorney, has been helping Mason with her case. She said Mason is not alone.

“It's a real breach of trust when servicers have raised this expectation of giving certain disaster relief and then they're not offering it at a moment where these homeowners really don't need any more stress,” she said.

Amanda Huezo, another Altadena homeowner whose property was damaged in the Eaton Fire, said Select Portfolio Servicing also demanded a balloon payment from her at the end of the 90-day forbearance period.

“They made me feel hopeless,” Huezo said.

She said she thought the company would give her some time to slowly get caught up. “But it wasn't that way," Huezo said. "They put pressure on me that I need to pay right away.”

Huezo, 62, said she and her husband lived in their Altadena home for 35 years. He ran a Mexican restaurant in Altadena called Lucy’s Place, but it closed down after the fires emptied out the surrounding neighborhood.

They’re now living with their adult daughter, her husband and their two grandchildren. Huezo said she paid the balance out of fear that her mortgage company would put her loan in default.

“If they’re going to take me out of my property, it's hard to find another place,” Huezo said. “Especially now, with the high prices.”

The U.S. Consumer Financial Protection Bureau has also received a handful of complaints from people alleging that their mortgage companies are not abiding by the terms of the state’s post-fire forbearance program.

Williams advised borrowers who are struggling with their mortgage payments to apply for the state’s CalAssist Mortgage Fund, which can offer qualified applicants up to three months of mortgage payments, with a maximum grant of $20,000.

She also recommended reaching out to HUD-certified financial counselors through local organizations such as Neighborhood Housing Services of L.A. County, East L.A. Community Corporation and Habitat for Humanity of Greater Los Angeles.

Complaints about compliance with the state’s post-fire mortgage relief program can be filed through the California Department of Financial Protection and Innovation at this link.

If you’re experiencing problems related to the state’s L.A. fires mortgage relief program, share your story with LAist by emailing us at tips@laist.com.

LAist editor Jared Bennett contributed reporting to this story.