LOS ANGELES, CA – As residents of Mandeville Canyon work to recover from the devastation of the Palisades Fire, some homeowners are expressing outrage over an unexpected financial blow: their home equity lines of credit (HELOC) have been abruptly reduced by their bank.
Lisa Pelton, whose home was untouched by the 23,000-acre blaze, was among those impacted. She received a notice from City National Bank informing her that her HELOC would be reduced by $50,000 due to a perceived decline in her property’s value. The notice arrived just days after the fire began ravaging the area.
“I was appalled,” Pelton said Thursday. “I thought it was unconscionable what they did. They sent this letter out four days after the fire started to everyone in a certain ZIP code.”
City National Bank explained that properties in the wildfire burn area had “declined significantly” in value, prompting the decision to reduce credit lines. The bank stated it would reassess the credit limits once further evaluations were completed.
While financial institutions have a responsibility to mitigate risk following natural disasters, consumer advocates and affected homeowners have criticized the timing and abruptness of the move.
KTLA consumer reporter David Lazarus highlighted the bank’s approach as a cause for concern. “What should be concerning to homeowners is the speed at which City National Bank moved and the fact that it didn’t seem to do any due diligence whatsoever. It just cut first and asked questions later,” he said.
Pelton refused to accept the decision quietly. She contacted the bank directly and spoke to a representative who expressed empathy for her situation. Following her persistence, City National Bank reversed its decision and fully reinstated her HELOC.
This incident has raised alarm among other homeowners in the wildfire-affected areas, many of whom are already grappling with the financial and emotional toll of the disaster.
“This is a time when people are feeling very vulnerable,” Lazarus said. “If you don’t step up and defend yourself, nobody will for you.”
The Palisades Fire, which began on January 7, destroyed more than 6,700 structures and forced thousands of residents to evacuate. While most homeowners are now returning to their properties and beginning the process of rebuilding, the economic consequences of the fire continue to unfold.
The situation underscores the importance of financial preparedness and advocacy for homeowners affected by natural disasters. Experts advise those facing similar financial challenges to carefully review their accounts and credit terms, seek clarification from their banks, and escalate disputes when necessary.
City National Bank has not issued a public statement regarding the incident but is expected to continue reassessing properties in fire-damaged regions.
Residents impacted by wildfire-related financial decisions are encouraged to reach out to local consumer protection agencies or legal aid services to understand their rights and explore potential recourse.
