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

2024 Presidential Election Day Symbolic Elements.
Editorial: Retain Escamilla, Binda on Lynnwood City Council

Escamilla was appointed a year ago. Binda is serving his first term.

toon
Editorial cartoons for Thursday, July 10

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

Blame Democrats’ taxes, rules for out-of-state ferry contract

Gov. Bob Ferguson should be ashamed of the hypocrisy shown by choosing… Continue reading

Letter used too broad a brush against Democrats

In response to a recent letter to the editor, this Democrat admits… Continue reading

Kristof: Women’s rights effort has work to do in Africa, elsewhere

Girls in Sierra Leone will sell themselves to pay for school. The feminist movement has looked away.

French: Supreme Court hits a vile industry with its comeuppance

While disagreeing on the best test, the justices agreed on the threat that porn poses to children.

Comment: When ‘politically correct’ becomes ‘Trump approved’

Companies and reporters are seeing the consequences of using words the president doesn’t approve of.

A Volunteers of America Western Washington crisis counselor talks with somebody on the phone Thursday, July 28, 2022, in at the VOA Behavioral Health Crisis Call Center in Everett, Washington. (Ryan Berry / The Herald)
Editorial: Dire results will follow end of LGBTQ+ crisis line

The Trump administration will end funding for a 988 line that serves youths in the LGBTQ+ community.

toon
Editorial: Using discourse to get to common ground

A Building Bridges panel discussion heard from lawmakers and students on disagreeing agreeably.

Senate Minority Leader Chuck Schumer (D-N.Y.) speaks during a news conference at the U.S. Capitol on Friday, June 27, 2025. The sweeping measure Senate Republican leaders hope to push through has many unpopular elements that they despise. But they face a political reckoning on taxes and the scorn of the president if they fail to pass it. (Kent Nishimura/The New York Times)
Editorial: GOP should heed all-caps message on tax policy bill

Trading cuts to Medicaid and more for tax cuts for the wealthy may have consequences for Republicans.

toon
Editorial cartoons for Wednesday, July 9

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

Welch: A plan to supply drugs to addicts is a dangerous dance

A state panel’s plan to create a ‘safer supply’ of drugs is the wrong path to addiction recovery.

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.