The Oso landslide last spring took the life of Julie Kuntz’s aunt as well as the lives of friends and neighbors, and it destroyed her family home.
She faces more than profound grief. She and other survivors are left with looming financial devastation.
In March, the hillside let loose above a neighborhood of homes off Highway 530, spreading tons of churning earth and debris across a square mile. The landslide killed 43 people and obliterated more than 40 homes.
Standard property insurance policies don’t cover damage caused by mudslides. That left the Kuntz family and other survivors responsible for mortgages on houses that no longer exist.
“Most people don’t have the right insurance for a mudslide,” she said. “When we realized we didn’t have mudslide coverage, we started to panic.”
Kuntz’s situation spurred her employer, Coastal Community Bank, to offer to help survivors by forgiving any home, business or auto loans.
That amounts to a handful of customers, but the bank’s gesture led the way for other financial institutions to do the same. It also started a national conversation about how banks and the government might better handle properties destroyed by a catastrophic event.
“I didn’t mind challenging and talking to some of the other banks in this country about what they were going to do,” said Eric Sprink, Coastal’s president and chief executive.
The United Way of Snohomish County recognized the Everett-based bank with a Community Partner Award in October, not only for its actions after the landslide, but for a year-round commitment to the community. This is a bank whose employees logged 7,000 volunteer hours in the year before the tragedy even occurred.
Coastal prides itself on being a small town bank, the kind of place you know your banker. Investors formed the bank in 1997 to serve local people and small businesses. Most of them still sit on the bank’s board of directors today.
The bank’s 10 branches serve many smaller communities in the county, including Sultan and Arlington. It is the only bank in Darrington, just down the road from where the landslide occurred.
“Being a locally headquartered bank allows us to listen to the community more aptly,” Sprink said. “We can respond more quickly and with laser-like focus.”
Sprink is quick to acknowledge that the bank is one of many community organizations that helped after the slide. Forgiving loans started out as a behind-the-scenes offer.
When Sprink learned Kuntz was affected, he asked how the bank could help, and Kuntz mentioned the $20,000 home improvement loan she’d taken with the bank.
“There is nothing to collect on,” Sprink said. “We might as well relieve the emotional burden of the people involved.”
Sprink offered to forgive Kuntz’s home improvement loan and started quietly talking to other customers affected. The act became public after someone mentioned it to the media. Then, the head of the bank used the platform to nudge other financial institutions to follow suit.
“We didn’t send out a press release,” Sprink said. “That’s not the intent of what we were doing. The intent was to do the right thing.”
Coastal is working with a handful of customers — Sprink declined to give an exact number — with business, home and other loans ranging from $5,000 to $300,000. Most of these cases are in limbo, waiting to see if the county will buy back property.
The county applied for a federal grant to help pay for the buyout, but it’s still up in the air. A buyout might be a better option for property owners, who have to report a forgiven mortgage on their tax returns as “income.”
“That is one of the absurd outcomes, that (loan forgiveness) is seen as a windfall under the IRS code,” said Bryan Adamson, a Seattle University associate professor of law with expertise in consumer protection and mortgage lending.
The federal government could help mitigate situations like the Oso landslide by not taxing debt forgiveness as income, he said.
At the very least, lenders could suspend mortgage payments in a disaster area for at least six months and loosen credit reporting policies for survivors who can’t make payments in the months after a disaster.
Coastal forgave Julie Kuntz’s home improvement loan, but her $200,000 mortgage is through Citigroup. After the tragedy, the family was surprised to learn their home insurance policy wouldn’t cover anything. She’s working with Citigroup now on a solution.
Charities have stepped up to help, including the Cascade Valley Hospital Foundation, which pledged up to $30,000 per family to help survivors find permanent housing. But that doesn’t pay for her mortgage, which she’s still making payments on.
At first she felt uncomfortable even asking questions about her mortgage, when her neighbors had lost loved ones. She realized her family needed to move on and plan for the future. They needed a permanent home and financial stability.
Kuntz is a local who cares deeply about her community. She went to Darrington High School, and after she married Cory Kuntz, it seemed only natural to return to his family’s land in the Hazel area outside Darrington.
The 8.5 acres used to be part of a dairy farm. They set to work fixing up a 1960s rambler and raising their son, Quinton, now 16.
He’s an outdoorsy kid who enjoyed disappearing into the woods behind their home to hunt grouse with his dog, Buddy, or ride his dirt bike. For the family, it was a sanctuary.
Kuntz, now a marketing coordinator for Coastal, was the branch manager of the Darrington branch of the bank. She was there when it got its start at a card table in the corner of the hardware store. Her husband, Cory, works for Hampton Mills in Darrington.
The Kuntz family left their home with some friends less than an hour before the landslide. They were headed to Tacoma to watch Quinton’s baseball game.
Julie Kuntz received a text in the car from a friend, who told them there had been a slide and their house was gone. She thought at first it was some mud in the house, and there was nothing they could do, so they continued driving.
As more horrific details poured in, the family realized it was bad.
Their home was the last to be hit by the slide. Her home appeared on the front page of The Herald, an American flag sprouting tall amongst the rubble.
“It was like our house was put through a blender,” she said.
The day after the slide, searchers found Buddy, the family dog, alive but buried. After 20 minutes of cutting through debris with a chainsaw, a rescuer pulled the dog free.
The moment was captured on video, a small miracle in amidst horror.
In the days after the tragedy, Coastal employees were focused on getting the branch in Darrington up and running. Darrington was cut off from Highway 530 and Coastal was the only bank in town. The slide cut internet access, something essential for bank functions. Frontier Communications laid a new line on top of the road and the bank was able to open its doors.
Coastal added extra staff to its Darrington branch and offered to serve as a collection point for donations.
The bank accepted funds from all over the world. It’s a big job because each donation must be processed.
In one instance, KING-TV’s Jesse Jones told viewers on his “Get Jesse” segment that the folks in Oso needed gas cards. In the next few days more than $100,000 worth showed up in the bank’s P.O. box.
“It was a horrible situation, but people reacted beautifully,” Sprink said.
When Julie Kuntz returned to work a few days after the slide, the head of Coastal pulled her into his office. He reminded her she was the CFO of her family, and told her the bank planned to forgive her loan and others.
“It was powerful from a business perspective,” she said. “Everyone did what they could.”
The family is moving forward as best as they can. They live in a small rental. There are no plans to rebuild or return. Kuntz said most of her neighbors feel the same.
“They don’t want to live there because of the things they saw,” she said. “It feels like a graveyard.”
Talk to us
> Give us your news tips.
> Send us a letter to the editor.
> More Herald contact information.
