Slide erased their homes, but maybe not their loans

[arikara]

In the aftermath of the Snohomish County mudslide, surviving homeowners face the possibility having to repay mortgages on homes that no longer exist.

A community bank with branches on both sides of the Snohomish County mudslide says it’ll forgive uninsured debts for customers affected by the catastrophe. But bigger banks aren’t offering a blanket reprieve, leaving homeowners — many of them with large mortgages — in financial limbo.

“It’s really going to take all of the banks helping to get that market back on its feet,” said Eric Sprink, CEO of Everett-based Coastal Community Bank, which has branches in Arlington and Darrington . “If insurance doesn’t help them, Coastal stands ready and willing to write off our debt.”

More than a week after the March 22 mudslide, which destroyed dozens of homes and killed more than two dozen people, the survivors and families of the dead are left to grapple not just with emotional losses, but financial ripple effects too — including debts on houses and autos chewed up by the mile-long landslide, one of the worst natural disasters in state history.

snip

Because mortgages are legally binding contracts, homeowners are still responsible for full repayment of the loans, even if the homes are gone, said Lyn Peters, a spokeswoman for the state Department of Financial Institutions. The state is advising survivors of the mudslide — or in some cases, the heirs of those who died — to call their banks to work something out.

But those who do might not get a quick resolution because the banks often don’t own the loans; investors do, and Fannie Mae, the government-sponsored enterprise, is one of the biggest. Fannie Mae says it permits banks and other mortgage servicers to give homeowners in federally declared disaster areas a “forbearance,” or temporary break on making payments, for as long as 12 months.

snip

http://seattletimes.com/html/latestnews/2023278858_mudslidefinancialxml.html

Those poor people. Read the whole thing. It was hard to cut anything out of this.

[arikara]

1. State allowed logging on plateau above slope

This article was already posted but I have noticed that in the reports, the reason is rarely mentioned or if so, only briefly in passing. I think the people need to go after the government who approved it, and the logging companies.

In recent decades the state allowed logging — with restrictions — on the plateau above the Snohomish County hillside that collapsed in last weekend’s deadly mudslide.

http://seattletimes.com/html/localnews/2023225363_mudslideloggingxml.html

[bvar22]

13. I hope there is a way for the homeowners damaged by the slide...

... to file some kind of class action lawsuit against the logging company.


AMERICA!!!!
Land of the FREE and Home of the Brave!!!

[Lex]

2. The home owners insurance won't pay?

Most people with mortgage loans are required to have homeowners/hazard insurance.

[DURHAM D]

7. Yes but...

Insurance can help recoup some financial losses, but standard homeowners policies don’t cover losses caused by landslides, floods or earthquakes.

...

Alternatively, homeowners can buy a “difference-in-condition” policy that offers some protection against earthquakes and landslides, said Karl Newman, president of the NW Insurance Council. Only 4,700 homes and business owners in Washington have bought policies to protect against landslides, he said.

“There are thousands and thousands of people in Western Washington at risk of this, but only a few have taken out a policy to protect them against this risk,” Newman said.

But there’s a catch: If you live in an area known to have a high potential for landslides, you probably can’t get the insurance, said Sandi Esparza, a manager at Hub International Northwest, a Bothell insurance brokerage.

“You need to buy it before your area erodes and you need it,” she said.

[Xithras]

8. Only if they have a special policy.

Landslides, floods, and earthquakes aren't covered by typical homeowners insurance policies.

Landslides require something called a "difference in conditions" rider in order to cover land movement. They're usually recommended to people who live at the top or bottoms of cliffs, but they aren't required and many don't have them.

Mudslides are considered "flood events" and require flood insurance in order to be covered.

Whether they are covered will heavily depend on how the slide is ultimately classified, and whether they opted for the more expensive insurance options.

[SoCalDem]

25. And in many rural areas, the homes are manufactured homes

the value is in the land...which is worth a lot less after the slide

[Yo_Mama_Been_Loggin]

3. Sad to say that's pretty standard

Interesting though that the community banks will forgive this debt but not the large ones.

[MosheFeingold]

17. Accountability

"Interesting though that the community banks will forgive this debt but not the large ones."

Local banks are often owned by local people who live there.

Lot easier being a dick to someone you don't know.

[Jenoch]

4. I'm with Lex.

How is it possible they did not have homeowner's insurance. Every lender I have ever done business with has required it. If there is no other remedy, the Washington State Legislature should pass a bill with enough money to cover these losses. The county should be in deep shit for allowing the construction of those houses.

[Yo_Mama_Been_Loggin]

6. Not required if you put 20% or more down.

Or if you have more equity than that in your home.

When I first bought my home I was required to have mortgage insurance. When I refinanced five years later its value had gone up and I no longer had to carry it.

Obviously in this case the area is not build-able so it's an interesting dilemma.

[DURHAM D]

10. Mortgage insurance and homeowners insurance are two different things.

[Yo_Mama_Been_Loggin]

14. My bad

However most homeowners policies will not cover disasters like this.

[ScreamingMeemie]

12. You are talking about PMI, which is different.

Homeowner's insurance covers the loss of the dwelling.

[meaculpa2011]

26. I owe less than $25,000 on a home worth $600,000 and...

the bank required me to have maximum flood coverage. It turned out to be a life saver when Sandy sent eight feet of water through my living room window.

[DURHAM D]

9. See my post above.

The article addresses the issue of what is not covered. I would add sinkholes (earth movement) to the list of not covered items.

[Jenoch]

15. I had not thought about the unavailability.

If I could not get insurance because of the chance of a landslide, I would not buy or build at that location.

I am aware of people who had houses on the Red River on the MN/ND border who never bought flood insurance (it was avalable) and got major damage to their homes three times in 15 years. They were baild out by the federal government each time.

[countryjake]

5. The ongoing tragedy...

Now the searchers are worrying about the snow-melt from the surrounding peaks. It's supposed to start pouring rain here again tomorrow, thru the weekend, and temps are on the rise, almost 60 degrees out, now. Once the Stilly begins its Spring raging, much of that hazardous, contaminated debris could get washed downstream.

Most of those big banks aren't going to give anyone suffering this death and disaster any breaks, at all. It absolutely disgusts me and will refrain from commenting on that, so as not to sound like a madwoman.

[onethatcares]

11. well hell,

it's not like the banks ever needed help to get out of a hole or anything like that.

gauddddammm big banks and I could probably list citi, boa, jpm and others that are just the scourge of the earth. anyone that banks with them has a severe mental deficiency in my opinion.

[WhiteTara]

16. No insurance? Really?

Who doesn't have homeowners insurance? I thought loan companies demanded it.

[shanti]

18. So...

Does bankruptcy wipe out the debt(s)? Sounds like only way out.

[dionysus]

19. isn't that what your homeowners insurance is for?

[tammywammy]

21. Apparently homeowners insurance doesn't always cover mudslides.

This is similar to when someone's home is flooded without flood insurance.

[dionysus]

22. i understand, but wouldn't you take out a special policy if you lived underneath a logged out hill?

that's an awful bad risk to take, like living in a flood plain and not having a flood policy...

[tammywammy]

23. Especially a hill that had a mudslide in 2006. an/t

[Liberal_in_LA]

24. if you have the right coverage

[TBF]

20. Let them foreclose. nt

[malaise]

27. And the death toll rose overnight

now 29.
If you couldn't get home insurance because of risk and the bank still gave you the mortgage, shouldn't the bank take the loss.

[countryjake]

28. Malaise, even if they had homeowner's insurance, it won't cover this.

Something considered a natural disaster like a landslide isn't included in most policies; coverage for that is extra (like getting added flood insurance), and it's a lot more expensive to insure against an "act of god". None of the people living along Steelhead Drive had it, according to everything I've heard, but they did have the standard home insurance.

That death toll is now up to 30 victims, 27 of them positively identified by the ME office, 15 people still missing. The medical examiner also has one set of remains that doesn't match with any description on the missing persons list.