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MortgagePoint » Your Trusted Source for Mortgage Banking and Servicing News 20 February 2025 C O V E R S T O R Y on collecting all available policy benefits," said consumer advocate Amy Bach, Unit- ed Policyholders Executive Director, in a prepared statement. Lara also put a moratorium on any non-renewals or cancelations for those in wildfire-affected areas. Though First American Financial Corporation reserved commentary on the wildfires until more is known, the compa- ny did discuss it in a recent blog post. The recent Los Angeles wildfires are on pace to be the most destructive in California's history, the company noted, explaining that it was too early to fully assess the scale of the damage, as the emergency was not yet over. But one clear result even then was a housing "supply shock," or a rapid reduction in housing supply. First American's post noted that it was difficult to quantify the extent of the supply shock, since most reports available at the time only counted "structures" destroyed—which doesn't easily translate into "housing units," the typical measure of supply in the residential market. "Rebuilding in Los Angeles will be challenging," wrote Xander Snyder, First American Senior Commercial Real Estate Economist. "The city is known for its difficult building environment. Although there have been some moves to relax cer- tain regulations to ease redevelopment, it remains to be seen whether these policies will have their intended effect. Long rede- velopment times and high redevelopment costs means there will be a significant period of time where all the displaced households will be seeking housing with less housing suddenly available. "Additionally, approximately 72% of all residential land in Los Angeles is zoned exclusively for single-family de- velopment, which could make it difficult to quickly build housing stock densely enough to accommodate demand." Synder added: "This will increase housing costs—both prices and rents— across the city. However, if many people who have lost their homes choose to relocate to other cities, the supply shock would be less severe, and the impact on rents and house prices would be more limited." Beyond the programs and initiatives already announced, further government initiatives are a matter of speculation, according to various government agen- cies and mortgage industry experts. "It's too early to assess the full impact of the devastating wildfires in California," NAIC, which was not granting interviews at press time, said in a prepared statement. "We would urge affected property owners to contact their insurance companies as soon as possible to see what their policy covers and then file claims. The California Department of Insurance—like all state Departments of Insurance—is available to assist consumers with their claims and insurance questions." The prepared statement added: "Insurance regulators work on behalf of their states to ensure stable, competitive marketplaces and financially solvent carriers. They make sure that insurance companies have the financial resources to make good on their promises to pay claims. They work to ensure that con- sumers have choices when it comes to buying insurance to protect their family and their property. "Nobody knows what the gov- ernment is going to do," said Shawn Yerkes, Group President, Financial Services, for Fay Financial. "Obviously, co-insurance is going to be an issue moving forward. Every time government has stepped in, they have issues. You saw that in Florida, where they created a subsidized agency [Citizens Property Insurance Corp.], and now they're trying to sell off the assets." Citizens Property Insurance Cor- poration said that its policy count has dipped below 1 million for the first time in more than two years as the Florida property insurance market continues to improve. In early December, Citizens an- nounced its policy count had dropped to 987,650, which the organization credited to its the Citizens Depopulation Pro- gram. Since January 2024, the program has transferred more than 428,000 Citizens policies to private insurance companies approved by the Office of Insurance Regulation. Citizens is also seeing a reduction in the flow of new policies into Citizens, which it says is due to renewed interest by new and existing private companies to enter or expand in the Florida market. California's FAIR Plan is a similar concept, providing basic fire insurance coverage for high-risk properties when traditional insurance companies will not. In mid-January, the FAIR Plan said that initial estimates indicate that about 22% of the structures in the CAL FIRE incident map for the Pacific Palisades Fire are covered by the FAIR Plan, with a total potential exposure of over $4 billion for the Pacific Palisades Fire, and a total potential exposure of over $775 million for the Eaton Fire, according to the CAL FIRE incident maps. However, there had yet to be any estimates for the Hughes Fire or the other smaller California fires that emerged. Though the California Fair Plan As- sociation points out that exposure doesn't mean losses, a Los Angeles Times article questioned if the association could stay sol- vent without an additional cash infusion. The California fires, as well as the hurricanes throughout last year, will lead to higher property insurance costs across the country, mortgage industry experts agree. "In the last couple years, it's been extremely difficult for anybody in Cali- fornia to get insurance, and the cost has doubled and or tripled in some areas," said Gretchan Francis, InsureMAC Managing Director. Though more expensive than tradi- tional insurance, and only intended to protect the lender, the sharp increases in traditional insurance means that lend- er-placed insurance currently "doesn't look so bad," according to Francis. Historically, 1-2% of homeowners have lender-placed insurance. Though Lara's one-year moratorium on cancellations and non-renewals helps homeowners maintain insurance now, it will likely lead to more carriers leaving the state and even sharper insurance increases in the future, Francis claimed. Furthermore, those increases won't be limited to the areas impacted by the wildfires, which are a crisis for the car-