California: As federal aid stalls, Governor Newsom announces proposed effort to close insurance gaps for LA fire survivors, expands mortgage relief
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Jan 6, 2026

As federal aid stalls, Governor Newsom announces proposed effort to close insurance gaps for LA fire survivors, expands mortgage relief

What you need to know: Governor Newsom is announcing additional commitments from banks to help extend forbearance and will expand California's successful CalAssist mortgage relief program to more homeowners. The state is also exploring new funding options to help Los Angeles firestorm survivors bridge the gap between insurance payouts and the cost of rebuilding.

LOS ANGELES – One year after catastrophic wildfires tore through Los Angeles, Governor Gavin Newsom today announced new actions to help survivors rebuild and remain in their homes, including expanding access to the successful CalAssist Mortgage Relief Program eligibility to provide additional support and reach more survivors. Today, the Governor also announced additional commitments from banks to provide extended forbearance for approved borrowers. And as part of the state's work to directly address the needs of LA firestorm survivors, Governor Newsom will explore a new financing program to help survivors bridge the gap between insurance payouts and the cost of rebuilding, to address feedback and concerns from homeowners seeking to rebuild. The Governor continues state efforts to assist survivors as the Trump administration turns its back on providing survivors with disaster aid.

"This disaster was unprecedented, and it's created challenges unlike anything we've seen before — demanding flexibility, partnership, and a willingness to adapt in real time. We're on the ground with survivors, listening closely, learning from them, and adjusting our approach to meet their evolving needs. I'm deeply grateful to our financial partners who are stepping up to help provide financial relief to those who have lost so much. California will continue to do the hard work of helping these communities rebuild and recover — bringing creativity, urgency, and resolve to effectively meet this moment."

Governor Gavin Newsom

Many homeowners face a gap between their insurance proceeds and the cost of rebuilding. The Governor has called on President Trump to send California's request for federal aid to Congress, which will fund federal programs that can help address this gap. But recovery requires all hands on deck, and the Governor is also working with private industry to offer lending products that can provide sources of funding to help homeowners finance reconstruction

Rebuild financing

Building on months of consistent engagement between the state and mortgage and banking industry leaders to ensure everyone does their part in this recovery, lenders and financial institutions, including Bank of America and member institutions of the California Mortgage Bankers Association, have designed and are launching new lending products specifically for LA firestorm recovery. These products will help homeowners finance rebuilding of homes destroyed in the fires.

To help more homeowners qualify for construction loans, the Governor is exploring creative financing mechanisms to address the residential rebuild funding gap that could integrate with private lender offerings. Over the coming months, the state will work with private lenders, philanthropic partners, state agencies, and the legislature to develop the proposed fund.

CalAssist Program

Governor Newsom previewed today that the state will expand eligibility for the CalAssist Mortgage Fund — which provides mortgage assistance grants to homeowners  — to allow more dollars to flow to California homeowners impacted by recent disasters. The $125 million package includes direct assistance and mortgage counseling, with over $100 million available in direct relief.

So far, the state has paid  $5.98 million to 732 households – the vast majority of which are survivors of the Palisades and Eaton fires. Significant funding remains to help survivors, including those who may need continued relief when forbearance ends.

Funded by the state of California and administered through the California Housing Finance Agency (CalHFA), the program provides grants for three months of mortgage payments, up to $20,000 per household, subject to income limits – up to $211,050 in Los Angeles County. Building on the program's success and informed by applicant data, the state will provide expanded eligibility criteria in the next several weeks. Applying is free, and funds are paid directly to mortgage servicers and never have to be repaid. The expansion will help ensure that more families affected by the recent fires in Los Angeles are able to access this important relief.

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Keeping survivors in their homes through mortgage relief

Over the past year, Governor Newsom has continued to engage with lenders on additional support for survivors nearing the end of their forbearance period. Major lenders have stepped up to collaborate on solutions to provide those experiencing hardship additional flexibility as they continue down their road to recovery.

Building on the Governor's announcement in January 2025 of commitments from 5 major lenders and over 420 other financial institutions to offer forbearance for impacted customers, the Governor signed into law AB 238 (Harabedian), which extended forbearance for up to a maximum of 12 months from the date of request for borrowers experiencing financial hardship. Any consumer who believes their mortgage servicer is not complying with the law or their January 2025 commitments can submit a complaint to the California Department of Financial Protection and Innovation here.  Since January 2025, DFPI has received 233 consumer complaints regarding mortgage forbearance. 224 of those complaints were resolved, with 9 still in review, and 207, or 92%, were resolved in the consumer's favor.

Bank of America is now offering qualifying customers up to 2 additional years of forbearance, beyond the initial 12-month period, for those who plan to rebuild their home. Today, the Governor announced that other major national lenders — Wells Fargo, JPMorgan Chase, U.S. Bank, and Citi — have agreed to streamline the process for requesting at least one additional forbearance period of up to 90 days for qualified borrowers. Impacted borrowers may request this additional forbearance by contacting their servicer and providing verbal rationale –  no paperwork or forms required.

Additional forbearance may require approval from investors such as Fannie Mae and Freddie Mac. Financial institutions have agreed to offer additional forbearance of up to 90 days to impacted customers subject to these approvals consistent with the terms of the Governor's January 2025 agreement with banks, including offering payment options that do not include lump sum (balloon) payments, waiving any mortgage-related late fees accruing during the forbearance period, and not reporting late payments of forbearance amounts to credit reporting agencies.

California steps up as federal government falls short

California will continue aiding those affected by natural disasters now and in the future. This administration will not leave any Californian behind. However, this work cannot be continued without the support of the federal government.

In addition to taking action to speed rebuilding, the Governor is also standing up for the Altadena, Palisades, and Malibu communities by calling out the White House for failing to approve long-term disaster funding for survivors of last year's catastrophic Los Angeles wildfires.

The Governor, who recently went to Washington, D.C in early December to advocate for survivors, renewed his call for immediate approval of the disaster supplemental, urging Congress and the President to deliver the same compassion and urgency that have been extended to other communities across the nation. This is the fourth request for funding since February, when President Trump promised he would "take care" of survivors.

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The federal government plays a critical role as a partner to the state in this long-term recovery effort. Funding in this supplemental appropriation would:
  • Fund the rebuilding of schools, childcare centers, homes, and vital community facilities. This helps thousands of working families, veterans who lost homes, and nearly thousands of students displaced from their schools.
  • Keep small businesses open, support the economy, and maintain jobs. LA's small businesses and family-owned enterprises are the backbone of our local and national economy. Disaster loans and grants will keep them open, preserve thousands of jobs, and spur wider economic recovery — benefiting Americans who may never set foot in Los Angeles but rely on its goods, services, and culture.
  • Restore damaged water systems, rebuild responder infrastructure, and improve air quality monitoring. This protects not only LA's population but the tens of millions who travel, conduct business, and interact with the region each year.

For more information visit ca.gov/lafires.

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