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California Wildfires and Lending Delays

October 25, 2007

This morning I woke up to this notice:

Effective immediately due to current fire activity in California, XXXXXXX Bank will temporarily cease funding loans in the following California counties until further notice: San Diego, Los Angeles, San Bernardino and Orange.

Wow!

When the earthquake happened in ’89, lenders reacted by requiring additional inspections and limiting lending in certain affected areas. So, how does a lender mitigate their liability while still serving their clients?

Unlike the earthquake, which was a relatively measurable, one time thing, raging wildfire liability is literally changing with each tick of the clock.

While the above lender reaction is an attempt at mitigating lender liability, think about all the people poised to close on their home loan – lives packed into boxes in the back of moving vans – who are now unable to close their home purchase.

For me, this notice reinforces the sheer magnitude of the damage. Not four cities, or neighborhoods or four areas. Four counties! Millions of people, their lives and their homes.

We have you in our prayers.

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