Rebuilding after wildfires: Homeowners who get insurance money might face delays from their lenders

LOS ANGELES (KABC) -- ABC7 On Your Side is helping you in the recovery process following the devastating Eaton and Palisades Fires.

Some people who lost their homes are already dealing with a lot of red tape as they make plans to rebuild, especially when it comes to insurance and mortgage providers.

Here's why homeowners who receive money from their insurance provider could face delays from their lenders.

Like so many others, not much is left of Christopher Antola's home in Pacific Palisades. He said it appears the roof caught fire and everything collapsed.

"It was almost surreal in that it didn't feel like my home anymore," he said.

Antola wants to rebuild and was pleasantly surprised when his insurance company sent him a check right away. As is customary, the check was made out to him and to his lender.

The lender said that before it endorses the check, Antola has to submit a number of documents.

"The documents included a signed building contract, contractor number, contractor license number, basically all the things that are impossible to have at this day and age after a wildfire," said Antola.

He said the lot still needs to be cleaned and needs an architect to come up with plans. After that, he can get a contractor.

"I explained that it could take years for me to have those pieces of paper to which they responded, 'Okay, then, you know, the check will just sit in escrow for a period of time," said Antola.

Insurance experts say unless you own your home outright, this will affect everyone who tries to rebuild.

"It is normal for a lender to hold onto an insurance check, refuse to endorse it over, until they get some assurance that the homeowner does intend to replace that destroyed the asset, otherwise, they're kind of holding the bag," said Amy Bach with United Policyholders.

Financial experts say it will likely take tough negotiations with your lender to get your money.

"First of all, request a partial disbursement," said Ali Hashemian with Kinetic Financial. "Request it in writing, and be persistent in your request. I've also worked with clients in obtaining architectural designs, or feasibility studies, to show that they're in that process, or even going as far as permits and zoning requirements."

All of that could require a homeowner to pay upfront out of his or her own pocket while the insurance money sits in an escrow account.

"That type of response is irrational and illogical, and frankly, deprives people of the money they might need to contract with architects, structural engineers, the things that are necessary before you get a contractor," said Antola.

Eyewitness News contacted First Citizens Bank, Antola's lender, and the bank sent a statement that read in part, "While we are unable to comment on the circumstances of any individual customer, we are offering relief options to help customers navigate the rebuilding process and we are working with them as they make critical decisions about rebuilding or other alternatives, in accordance with local and state guidelines."

Antola hopes to work it out with his lender, but he fears it's going to delay him for a long time.

"The mortgage contract that I have with them is similar to every other mortgage contract on the planet, and what they're doing is not against the law, but doesn't make it right," said Antola.