How to lighten slide victims’ financial burden

The March 22 Oso mudslide was an unspeakable tragedy. As workers continue to search for still-missing loved ones, those who survived find themselves confronting a host of financial and legal uncertainties.

In leveling over 40 homes, the mudslide also washed away residents’ personal effects. As a result, the most basic challenge of proving legal identity to engage in a host of essential transactions is just the beginning. Survivors and the heirs of the deceased must establish or re-establish proof of right, title, or ownership in real and personal property. Only then can they begin to address legal matters involving their mortgages, automobile loans, and other obligations — facts of life that, sadly, were not extinguished by the mudslide.

In general, issues of probate and residential mortgages will be most profound for the survivors. Establishing a legal interest in a destroyed residence will be indispensable to negotiating with any mortgage servicer or lender. Moreover, if a home was not in the name of a survivor, and if the home was willed to several heirs, clearing title may be a precondition to receiving assistance from various services such as FEMA or Fannie Mae. The very practical barriers to property ownership and title verification, probate, estate, and other domestic and family law issues will continue to make life difficult for the survivors — especially if no proactive measures on the part of government and financial institutions are taken.

Standard insurance policies do not cover landslides. Unless big mortgage lenders follow the admirable lead of Coastal Community Bank and agree to forgive the homeowners’ mortgage loans, many survivors will find themselves in the absurd position of being obligated to make payments on a home that no longer exists. Since the area has been declared a disaster area by President Obama, lenders, at the very least, should suspend the obligation to make mortgage payments for at least six months. Such a moratorium should include one on assessment of late fees. Importantly, because survivors will need new housing, and because credit reports are used by landlords and lenders alike in deciding who can access housing, lenders should not report adverse events such as past due payment to credit bureaus. Loan forgiveness and relaxed credit reporting policies should be applied not just by mortgage lenders, but by business lenders, automobile or agriculture equipment purchase lenders as well as credit card companies.

The federal and state government could also go far in helping mitigate the resulting distress by refusing to tax any mortgage forgiveness as income. Because Congress refused to extend the Mortgage Debt Relief Act of 2007, extinguishing the homeowners’ mortgages will be considered “income” and thus taxable. That outcome is cruelly unconscionable, especially where the homeowner has lost life, if not property to a natural cause. Moreover, while federal disaster aid compensates homeowners for their losses up to $32,400, not all survivors were homeowners. Consequently, relief should be extended to all those adversely impacted by the mudslide — whether an owner, renter, or someone just passing through.

For those who survived the heartbreaking Oso disaster, and those who must assume the obligations of their loved ones lost in the devastation, the road to financial stability may be a long one. However, the government, banks and other financial institutions can go far to making that road as smooth as possible.

Bryan Adamson is a Seattle University associate professor of law who teaches consumer protection matters and a Board Member of Northwest Consumer Law Center.

Talk to us

> Give us your news tips.

> Send us a letter to the editor.

> More Herald contact information.

More in Opinion

toon
Editorial cartoons for Tuesday, March 19

A sketchy look at the news of the day.… Continue reading

Students use a 3D model to demonstrate their groups traffic solutions at Hazelwood Elementary School on Wednesday, March 29, 2023 in Lynnwood, Washington. (Olivia Vanni / The Herald)
Editorial: Your choice, drivers; slow down or pay up

More traffic cameras will soon be in use in cities and highways, with steep penalties for violations.

Protect Affordable Care Act by rejecting Trump

The stakes are high in this year’s presidential election. If candidate Donald… Continue reading

Support candidates who support schools

I promised I would stop writing these letters because the gates of… Continue reading

Biden must stop supplying weapons to Israel, Ukraine

Bad foreign policy will come back to haunt us in the long… Continue reading

Comment: Flow of U.S. guns into Mexico is other border crisis

Guns, legal and illegal, are contributing to crime and instability in Mexico, driving many to seek asylum.

RGB version
Editorial cartoons for Monday, March 18

A sketchy look at the news of the day.… Continue reading

Carson gets a chance to sound the horn in an Everett Fire Department engine with the help of captain Jason Brock during a surprise Make-A-Wish sendoff Saturday, Oct. 21, 2023, at Thornton A. Sullivan Park in Everett, Washington. (Ryan Berry / The Herald)
Editorial: Everett voters will set course for city finances

This fall and in coming years, they will be asked how to fund and support the services they use.

Devotees of TikTok, Mona Swain, center, and her sister, Rachel Swain, right, both of Atlanta, monitor voting at the Capitol in Washington, as the House passed a bill that would lead to a nationwide ban of the popular video app if its China-based owner doesn't sell, Wednesday, March 13, 2024. Lawmakers contend the app's owner, ByteDance, is beholden to the Chinese government, which could demand access to the data of TikTok's consumers in the U.S. (AP Photo/J. Scott Applewhite)
Editorial: Forced sale of TikTok ignores network of problems

The removal of a Chinese company would still leave concerns for data privacy and the content on apps.

Rep. Strom Peterson, D-Edmonds, watches the State of the State speech by Gov. Jay Inslee on the second day of the legislative session at the Washington state Capitol, Tuesday, Jan. 9, 2024, in Olympia, Wash. (AP Photo/Lindsey Wasson)
Editorial: Legislature has its own production of ‘The Holdovers’

What state lawmakers left behind in good ideas that should get more attention and passage next year.

Comment: Measles outbreaks show importance of MMR vaccinations

The highly contagious disease requires a 95 percent vaccination rate to limit the spread of outbreaks.

Harrop: Should ‘affordable’ come at cost of quality of living?

As states push their cities to ignore zoning rules, the YIMBYs are covering for developers.

Support local journalism

If you value local news, make a gift now to support the trusted journalism you get in The Daily Herald. Donations processed in this system are not tax deductible.