Unbound DNS, WAN Down and Local DNS Resolves

[smajor]

I have Unbound DNS configured as my DNS. I do use DHCP also with some static IPs defined to hosts. I have some LAN hostnames defined and it all seems to work okay... except when the WAN goes down (like it is now, I'm on my phone's hot spot).

I'd think that local hosts should still be able to resolve to each other. I must be missing a setting or maybe a rule to allow this.  Is this enough information to get a few suggestions?