Issue 3, 2025: The Fires, Insurance, Financial Help, EVs and Some Economic Stuff
The Fires
Where to start? I guess that depends on where you want to point fingers.
Well, let’s start on the helpful side since many of you know people who no longer have a home in Pacific Palisades or Altadena. For those folks…
Regardless of who funded your mortgage, if Fannie Mae or Freddie Mac owns your home loan, you have up to 12 months of payment forbearance without fees or penalties.
If 12 months isn’t enough, you can apply for more.
It won’t be enough.
Call your loan servicer to find out if either of those two entities owns your loan. According to Google Search Labs, they have about 62% of all conforming loans in the US.
If you worked at a business destroyed in the fires and no longer have a job, you also qualify.
The same applies to FHA loans
The major lenders – BofA, Wells, Chase, etc. – have forbearance programs, but they usually go 90 days at a time.
Regardless of the lender, YOU need to make the phone call and write down the time, date, and person you talked to. And get the spelling of their name.
You’ll remember it better, and they’ll know you are paying attention.
The SBA – Small Business Administration – is also in the disaster relief business. Appropriately enough, it’s called the SBA disaster assistance loan.
They have physical damage loans for both homes and businesses. The link is here.
They will lend – keyword ‘lend’ – up to $500,000 for building replacement, either residence or business. If you are a tenant, you can apply for $100,000 in loans to cover personal property losses.
This is subject to whatever your insurance company gives you, and there are many caveats.
The American Red Cross is the main non-profit organization helping with recovery. You can help people affected by the fires by visiting redcross.org, calling 1-800-RED CROSS (800-733-2767), or texting the word CAWILDFIRES to 90999 to donate.
Fire Insurance
Yes, it’s expensive in California. Kind of like insurance in Florida.
If one thing will drive more folks out of California, it won’t be mortgage rates or property prices. It’ll be homeowners insurance.
You absolutely, positively, have to have it.
I have lived in my house for 30 years and have paid earthquake insurance for every one of those years. Yes, it’s a lot of money, but I sleep better.
And now LendingTree states that 10% of homeowners lacked insurance in 2023.
They also state that insurance premiums have risen 48% in the last 5 years.
There’s a correlation there somewhere.
California and Electric Vehicles
You may recall that an unelected entity known as the California Air Resources Board, fondly called CARB, mandated that starting in 2035 all new automobile sales in California must be fully electric.
Beware the phrase “As goes California, so goes the nation.” The governor of California loves to say that, by the way.
This had to be approved by the Feds, and they did so about a month ago.
Because that wasn’t enough, they wanted to apply the same standard to locomotives and diesel trucks, also for 2035.
Because of a change in Federal management, California has withdrawn its application.
Maybe they should build the infrastructure for electric vehicles first, but I think there are a few other priorities at this moment for the state.
And Finally, Some Economics
Core CPI – the Consumer Price Index without food and fuel – came in lower than expected.
3.2% vs. 3.3%. That is very good news.
Also, the business economic optimism index exceeded expectations again. It came in at 105.1 vs. expectations of 100.5 and 101.7 the month before.
Anything over 100 is good, and as I said last month, small business feels good.
Finally, the Federal Reserve Bank of Philadelphia’s survey of manufacturers was completed in the first week of January.
The survey's indicators for general activity, new orders, and shipments rose to highs not seen since 2021 and the largest increases since 2020.
Yes, prices were still heading up, but the increase in manufacturing activity is significant.
That’s it for this week. In California, it’s the beginning of recovery, assuming the only thing the state and city get involved in is the rebuilding of infrastructure. If the state can keep CARB and the California Coastal Commission out of the process, the insurance companies and contractors might be able to make a go of rebuilding what was destroyed. If not, the state and city may find themselves under new management.
