Mortgage Lenders Can Play a Critical Role in Building Resilient Homes

The ability to secure financing is one of the biggest determinants of whether a homeowner in the Palisades or Altadena can rebuild a home to higher wildfire-resistant standards.

There is often what we call a delta, or gap, between what the insurance company pays out for a code-compliant home and the cost to rebuild to new, resilient standards, such as the IBHS’s Wildfire Prepared Home Plus designation. For homeowners, this represents the opportunity for additional borrowing capacity with the right lender.

Today’s mortgage lenders can play a role in filling this gap in ways that align their incentives with those of the homeowner.

Here’s the basic idea: when a mortgage lender becomes a resilient-rebuild construction lender, the homeowner and the mortgage lender find themselves on the same side of the table: a resilient rebuild makes a home safer, increases the chances of long-term insurability, and preserves that home’s value.

The Role of a Mortgage Lender is Changing

Lenders are in the business of issuing loans and managing the risks that come with them—evaluating borrower creditworthiness, assessing property values, and ensuring homes remain insurable and financially viable throughout the life of a mortgage. They value stability, predictability, and long-term performance. Those qualities apply not only to homeowners (their customers), but also to the homes that secure their loans.

As fires, floods, and storms become more frequent and severe, mortgage lenders are beginning to shift how they manage risk. The “post-disaster” rebuilding period is no longer a rare, once-in-a-lifetime event but rather a recurring phase.

This means that after a disaster like a wildfire, the lender isn’t just a mortgage holder anymore. They’ve effectively become a construction lender—and a key decision-maker in whether that home is rebuilt at all, and whether it gets rebuilt to resilient standards, like IBHS’s Wildfire Prepared Home Plus.​

Case Study: Bank of America’s Rebuild Solution

In November of 2025, Bank of America announced a new program aimed at benefiting homeowners in the Palisades and Altadena.

Its “Rebuild Solution” will become a blueprint for other mortgage lenders to follow as natural disasters create aligned incentives between homeowners and lenders to rethink business as usual and rebuild to more resilient standards.​

Rebuild Solution: Here’s what it does

For its existing mortgage clients affected by the fires, Bank of America’s Rebuild Solution offers three benefits:

1. Extends forbearance by up to two additional years, beyond the current 12-month forbearance period, for clients who plan to rebuild their home.

2. Offers a Rebuild Line of Credit expected in February 2026 to help cover rebuilding costs not fully covered by insurance.

3. Preserves the client’s current lower interest rate on the underlying mortgage.

Bank of America’s Rebuild Solution could serve as a model for other mortgage lenders. It sends a powerful signal about the role mortgage lenders can play in the “new normal” of more frequent and severe wildfire risk:

1. Mortgage lenders can make life easier for homeowners in the wake of a disaster (extended forbearance).

2. Mortgage lenders can help finance resilient rebuilding in ways that wouldn’t have been possible otherwise (rebuild line of credit).

3. Mortgage lenders can preserve mortgage affordability for affected homeowners (preserving low interest rates).

While major banks like Bank of America are moving first, there are opportunities for regional and community banks to differentiate themselves in being the go-to lender when a homeowner wants to rebuild with resilience. In a market where traditional lending products fall short of covering resilient rebuilding costs, the institutions that step up now with tailored solutions will earn lasting customer loyalty and community trust.

Rebuilding with Resilience Benefits Everyone

Independent research underlines the value of building with resilience. Research by Headwaters Economics, an independent, nonprofit research group that works to improve community development and land management decisions, shows that California homes that meet  wildfire-resistant standards could reduce future economic wildfire losses by as much as 43% over traditional construction.

Those avoided losses are in everyone’s best interests: if a home remains standing, remains insurable, and preserves its value, homeowners and lenders both benefit. The homeowner reduces the likelihood of losing their biggest source of personal, and perhaps generational, wealth, and a lender reduces the likelihood of losing billions of dollars in fire losses across its portfolio. It’s a win-win.

According to a 2025 study, homes built to the basic California wildfire-resistant code (which was implemented in the early 1990s) sell for 1.4% to 2.5% more than homes built before the rules existed. Lenders like Bank of America, with neighborhood-wide exposure, have a further incentive (half of the LA fire survivors have a financial relationship with Bank of America).

Every $1 spent on rebuilding wildfire-resistant communities could save $210 in avoided future losses. When lenders support neighborhood-wide resilient construction, they can reduce the risk across a larger segment of their portfolio and increase the resilience of entire communities to wildfires.​

The Bottom Line

For traditional mortgage lenders to community banks, the new normal of recurring climate disasters presents new opportunities: lending more money to finance resilient rebuilding can de-risk entire portfolios and increase the chances that individual borrowers rebuild to resilient standards.

For homeowners, there’s never been a better time to talk to your lender about how they can partner with you to rebuild with resilience. And we can give you all the information you need to approach that conversation with confidence.

Take Action: What to Ask Your Lender

Your lender should be your partner in rebuilding with resilience. Whether you're working with a major bank or a community lender, here are four specific questions you can ask your lender:

1. “Do you offer extended forbearance for homeowners committed to rebuilding with resilience?”

2. “Can you provide a construction line of credit to cover the costs beyond my insurance payout?”

3. “Will you preserve my current mortgage interest rate if I rebuild to the IBHS Wildfire Prepared Home Plus standard?”

4. “What loan products do you have specifically designed for resilient rebuilding?”

If your current lender doesn't have answers, it might be time to find one who does. Rebuilding with resilience protects your family and your investment—and the right financial partner will recognize that and support you accordingly.

PILLAR is here to help

Ready to explore your options? 

PILLAR (the Platform for Long-Lasting Access and Readiness) was created to help homeowners navigate and understand the available options for rebuilding a home to resilient standards. It’s designed to make building to wildfire-resistant standards easier and more accessible to everyone by matching homeowners with grants, loans, and incentive programs that can lower the added cost of building for fire resilience.