We know that real estate agents show up for their communities on a regular basis. They share news about local businesses, connect new residents with trusted vendors, and showcase the best their town has to offer.
And when natural disasters strike, they step up even more, as we’ve seen with Hurricanes Ian, Helene, and Milton—and now with the wildfires in L.A. County.
But once the initial damage is done, homeowners still have a long road ahead.
Being able to guide them through their biggest questions is crucial, starting with: ‘What happens with my mortgage when my home was destroyed?’
How you answer their questions when they’re going through heartbreaking loss tells them everything they need to know about your commitment to serving their best interests.
So, how would you answer these 6 questions homeowners are asking right now?
#1: My home burned down. Do I still have to pay my mortgage?
The short answer? Yes. Anyone with an outstanding mortgage loan still owes the lender the money they agreed to pay.
That said, homeowners impacted by a natural disaster can apply for a forbearance on their mortgage loan, which can pause payments for up to a year.
Mortgage companies are required to offer forbearance on the roughly 40% of home loans backed by Fannie Mae and Freddie Mac. Loans backed by the Federal Housing Administration (FHA) as well as the Department of Veterans Affairs (VA) also provide this option.
Forbearance is often granted in three- to six-month increments.
Loans without federal backing—like the jumbo mortgages on the multi-million homes that burned down—may also be eligible for forbearance, though it depends on the mortgage companies servicing those loans.
Large banks like JPMorgan Chase and Bank of America have already announced they would offer disaster forbearance to assist homeowners impacted by the L.A. wildfires.
Forbearance has been expanded in recent years to protect consumers during most financial hardships. And anyone who paused their mortgage payments during the COVID pandemic will be familiar with the process of applying for one.
As your clients’ agent, encourage them to contact their mortgage servicer as soon as possible to request a forbearance to avoid late fees, penalties and foreclosures.
After forbearance, mortgage holders will need to repay the remaining balance of their loan, but options like disaster payment deferral can help them avoid lump-sum repayments.
Clients who can’t keep up with regular mortgage payments after the forbearance period ends can also ask their mortgage lender to modify the loan, which could mean stretching out the remaining payments over a longer period or refinancing at a lower interest rate.
Granted, that’s a negotiation between your client and their mortgage company. And there’s no guarantee the borrower will be happy with what the company offers.
#2: Do I still have to pay property taxes?
If your property was damaged, you may qualify for temporary tax relief through the Los Angeles County Assessor’s office.
To be eligible, your client’s property damage must exceed $10,000, and they must file a misfortune or calamity claim within 12 months of the incident.
Approved claims result in a lower tax rate until the property is restored or rebuilt.
#3: Do I still need to pay my utility bills?
Utility companies are offering relief to customers affected by disasters:
- Southern California Edison:
- Suspended billing for customers in mandatory evacuation zones (effective January 8, 2025).
- Homes confirmed as destroyed will be permanently removed from the billing list.
- Southern California Gas (SoCalGas):
- Forgives current and most recent bills for destroyed properties.
- Customers with service outages caused by safety shutdowns won’t be billed during the outage.
- Los Angeles Department of Water and Power (LADWP):
- Paused billing notices for affected areas.
- Encourages customers facing financial hardship to contact the utility for bill management assistance.
#4: Where do I get help finding temporary housing?
If any of your clients are displaced and searching for temporary housing, there are several resources available:
- Airbnb.org & 211 LA: Provides free temporary housing for those displaced by wildfires.
- Discounted Housing: Some landlords, like the Balaciano Group in the San Fernando Valley, and hotels are offering discounted rates for fire victims.
- Hotels: Use this list from the local hotel association, which includes information on discounts for fire victims and evacuees, to help clients find temporary housing in a facility with more or less standardized resources and amenities.
- Short-term Rentals: If your client doesn’t qualify for free or discounted housing from Airbnb.org and 211 LA, they can still find reasonably-priced temporary housing with Airbnb, VRBO, Pacaso, etc.
Use the list in the BAM Resource Guide for more options.
#5: Will my homeowner’s insurance pay off my mortgage?
Urge your clients with homeowner’s insurance policies to call their insurance agent as soon as possible to file a claim and find out exactly how much relief they can expect from their policy.
If your client’s home is destroyed or unlivable, their homeowner’s insurance likely includes a loss of use or additional living expense policy. What does that mean for them? It means their standard of living is covered while they get back on their feet.
- Living in a mansion? Their policy will cover renting a comparable place.
- Need laundry service, meals, or other essentials? That’s covered, too.
Clients with detailed records and receipts for all their expenditures related to their homes are best positioned to get the most out of their policies.
What About the Mortgage?
Let’s say your client’s home was worth $300,000 and they still owe $150,000 on their mortgage. Here’s how it works:
- Dwelling coverage steps in. This covers the cost to rebuild your client’s home or purchase a new one.
- But—and this is critical—the bank gets paid first. The remaining amount goes to your client to assist them in rebuilding or moving forward.
Some policies even go the extra mile, covering closing costs or offering a monthly stipend if interest rates have climbed.
Replacing Your Client’s Stuff
From your client’s favorite sneakers to their kitchen appliances, personal property coverage is there to help them replace what they’ve lost. Here’s how it typically works:
- Personal property coverage is usually a percentage of your client’s home’s value. For example, if your client’s home is insured for $300,000 and their policy includes 50% personal property coverage, they’ll have $150,000 to replace their belongings.
- Policies may offer replacement cost (pays what it costs to replace items today) or cash value (pays what the item is currently worth).
For a smooth claims process, remind your clients to keep a detailed inventory of their belongings. They can hire a company to document everything or do it themselves, but it is vital to store that list somewhere safe—in digital form or at least away from their home.
#6: I don’t have homeowner’s (fire) insurance. What can I do?
Every homeowner should be able to trust that if they lose their home to a natural disaster, they can call their real estate agent and receive helpful guidance on how best to proceed.
That holds true whether they have insurance or not. If you’re committed to nurturing lifetime relationships with your clients, you’ve got to know how to help them if their home is destroyed.
That includes:
- Assisting them in finding temporary housing and other must-have resources
- Guiding them on the first critical financial steps—like contacting their lender for a forbearance on their mortgage loan and filing a claim with their insurance company
If any of your clients don’t have homeowner’s insurance—or their coverage doesn’t include wildfires—they may still qualify for financial assistance from the government (state or federal).
If your client’s former insurance company declined to renew their policy or raised their premium to a level your client could no longer afford, causing them to cancel their coverage and look into more affordable options, that’s a different conversation compared to clients who neglected to obtain or renew their insurance coverage when affordable policies were available to them.
In the case of the L.A. County fires, many homeowners lost their homes at a time when affordable home insurance coverage was not available to them.
Recovery options will vary based on each client’s situation—income level, assets, family size, etcetera. Get as much information as you can, relevant to their losses and needs, so you can pinpoint the best resources for them.
This is not about getting future referrals or repeat business; it’s about treating your clients the way you would want to be treated after losing your home to forces outside your control.
Think about how you would want your agent to help you. Then do that for your clients.
