Helping Your Clients Through the Devastation of Wildfires: A Guide for Real Estate Agents

We all know that real estate agents are the backbone of their communities, always there to lend a helping hand. They're the ones sharing local news, connecting new residents with trusted vendors, and showcasing the best their town has to offer.

But when natural disasters strike, they step up even more. We've seen this time and again with hurricanes, wildfires, and other devastating events. Real estate agents are on the front lines, providing support and guidance to those in need.

After a wildfire, homeowners are left with a long and difficult road to recovery. They're facing a myriad of questions, and it's up to us as real estate agents to be there for them every step of the way.

In this blog post, I'll share some of the most common questions homeowners ask after a wildfire and provide guidance on how to answer them.

Question 1: My home burned down. Do I still have to pay my mortgage?

The short answer is yes. Anyone with an outstanding mortgage loan still owes the lender the money they agreed to pay.

However, homeowners impacted by a natural disaster can apply for a forbearance on their mortgage loan, which can pause payments for up to a year. This option is available for loans backed by Fannie Mae, Freddie Mac, the Federal Housing Administration (FHA), and the Department of Veterans Affairs (VA).

Forbearance is typically granted in three- to six-month increments. Even loans without federal backing may be eligible for forbearance, depending on the mortgage company.

Encourage your clients to contact their mortgage servicer as soon as possible to request a forbearance. This will help them avoid late fees, penalties, and foreclosure.

After forbearance, mortgage holders will need to repay the remaining balance of their loan. However, options like disaster payment deferral can help them avoid lump-sum repayments.

If your clients can't keep up with regular mortgage payments after the forbearance period ends, they can also ask their mortgage lender to modify the loan. This could mean stretching out the remaining payments over a longer period or refinancing at a lower interest rate.

Question 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.

Question 3: Do I still need to pay my utility bills?

Utility companies are often offering relief to customers affected by disasters. For example, Southern California Edison has suspended billing for customers in mandatory evacuation zones. Homes confirmed as destroyed will be permanently removed from the billing list.

Question 4: Where do I get help finding temporary housing?

If your clients are displaced and searching for temporary housing, there are several resources available. These include Airbnb.org, 211 LA, discounted housing from landlords and hotels, and short-term rentals.

Question 5: Will my homeowner's insurance pay off my mortgage?

Encourage 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. This means their standard of living is covered while they get back on their feet.

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.

Question 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. This 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. This includes assisting them in finding temporary housing and other must-have resources, guiding them on the first critical financial steps, and helping them explore government assistance programs if they don't have insurance.

Being a real estate agent is more than just helping people buy and sell homes. It's about being there for them in their time of need. By providing guidance and support to homeowners who have been affected by wildfires, you can make a real difference in their lives.

Sources: Wall Street Journal, Fannie Mae, Freddie Mac, Los Angeles Times

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