Officials of the Small Business Administration are preparing to handle a rush of low-interest loan requests from property owners in Southern California whose homes were damaged in the recent earthquake and its aftershocks.
The SBA will make the low-interest loans if quake-ravaged parts of Los Angeles and Orange counties are declared major disaster areas, as Gov. George Deukmejian has requested. Such a declaration must be approved by President Reagan.
"Yeah, I'd expect we'll see a lot of people," said George Camp, a deputy administrator for the SBA in its Sacramento office. "We would set up temporary offices in the affected areas." Bank of America has already agreed to provide the SBA with lending space in its second-floor branch office in Whittier, one of the areas hardest hit by last Thursday's quake.
That tremor and its largest aftershock, on Sunday, have caused more than $100 million in damage, affecting about 12,000 people who have been forced from their homes and businesses.
If disaster relief is approved, the SBA will be able to lend up to $100,000 on damaged residential property and up to $20,000 on personal property, Camp said. The loan interest rates will either be 4% or 8%, depending on what the borrower can afford, he said.
"We have two criteria," he added. "You have to need the assistance and you have to be able to repay the money. It's pretty basic."
Meanwhile, some lenders have set up hot lines to help frustrated, angry and fearful customers who need financial advice and assistance. Most of the damage on residential property has been confined to cracked walls and patios and toppled chimneys, lenders say.
One telephone assistance program was established by Quaker City Federal Savings in Whittier. The hot line, which runs 11 hours a day, is averaging about 75 calls an hour, according to the S&L's president, J. L. (Jerry) Thomas.
Thomas estimated that 2,000 to 3,000 residences in the Whittier area need repair work. "I've spent most of the morning trying to get demolition contractors up here from San Diego and Orange counties," he said.
American Savings & Loan also set up hot lines, which it has advertised heavily. Since a full-page promotional advertisement appeared in Monday's Times headlined "We're Here To Help," the hot lines have received well over 700 calls, American Savings officials said.
American Savings borrowers whose homes have been damaged may put off their October mortgage payments for a month, Michael A. Durkin, the S&L's chief lending officer, said. Otherwise, he said, there's "not much" that can be done for customers until a decision is made on federal disaster relief.
Meanwhile, the California Department of Veterans Affairs reported Tuesday that it has received more than 350 calls from borrowers whose residences were quake-damaged. There are more than 10,000 Cal-Vet loans outstanding in Los Angeles County alone, department official Jerry Jones said.
The department is advising veterans that properties on which the Cal-Vet loans were made are automatically insured against quake-caused structural damage through a special disaster indemnity program. By contrast, most private earthquake insurance, which normally has a 10% deductible clause, applies only if there is major damage.
Echo of '71
Not everyone is so busy.
"We have had no calls," said Cliff Miller, a spokesman for Great Western Bank in Beverly Hills, one of Southern California's biggest mortgage lenders. "We have just been amazed."
Others point out that the public concern this time around is a distant echo of the shock waves caused by the 1971 earthquake, which caused heavy damage in the San Fernando Valley.
"People were bringing in the deeds to their houses and giving them to us," said Raymond Rodeno, who at the time was chairman of Allstate Savings & Loan (now Sears Savings Bank). Now president of Progressive Savings & Loan in Alhambra, Rodeno said his financial institution has gotten no calls this time.
Rodeno's home in Pasadena sustained heavy damage, though. He said one large wall is so riddled with cracks that it will cost $12,000 to $14,000 to repair.
"They'll probably have to strip the wall down to the studs," Rodeno said. "My wife is going to love that." Like many others, Rodeno says he's waiting for SBA assistance.
Bank 'Anxious to Help'
Indeed, if low-cost funds become available through the government, "people would be crazy to borrow from a bank," said Paul Prichard, a senior vice president at Pioneer Bank in Fullerton.
Nevertheless, some lenders are willing to help their customers whose businesses or homes have been damaged. At least one--Landmark Bank in La Habra--is among those offering financial aid to businesses and home owners. "We've put the word out that we'd be anxious to help," said Craig Collette, Landmark's president. "We told the cities of Whittier and La Habra that we're available."
A woman who works for a corporate customer of Founders National Bank in Brea may get a special loan from the bank to repair damage at her turn-of-the-century Whittier home, Robert Cole, the bank's executive vice president, said.
"We told her we'd waive the loan fees and keep other costs low," Cole said. "It's not exactly a disaster program or anything formal. It's just something we can do for our customers."
Times staff writer James Granelli in Orange County contributed to this story.