One year after massive mudslide, owners of destroyed homes still trying to resolve mortgage issues
Dozens of Washington state homeowners whose former houses are not only underwater in terms of equity, but in some cases literally buried underground, are still struggling to resolve mortgage issues a year after a massive mudslide that killed 43 people.
For example, it makes no sense to force people to pay for property insurance on a home that no longer exists, a Parkview Services representative tells the Seattle Times, but some mortgage servicers are trying to do so. Parkview is a nonprofit housing counselor working with many of the affected homeowners in Snohomish County.
Considered the deadliest in U.S. history, the mudslide left many dealing not only with the loss of loved ones and their homes but also with major debt hanging over their heads. Different lenders have taken a different approach to the home loans. Coastal Community Bank in Everett has simply written them off, but a number of national banks have offered partial rather than complete relief.
A possible buyout of owners involving the Federal Emergency Management Agency could conceivably leave some with money in their pockets, although their homes are gone. That is part of the reason why some lenders have been slow to resolve mortgage issues, since there might eventually be money to apply to the debt from land sales, the article explains.
Ordinarily, when debt is forgiven, that can create an income-tax issue for the debtor, absent a bankruptcy filing. However, because the homes now have little or no value, tax may not be a problem.
“My gut feeling is there would be little or no tax,” Snohomish accountant James Gall tells the newspaper.
Related coverage:
ABAJournal.com: “Those who lost homes in massive Wash. mudslide may still owe mortgage payments”
ABAJournal.com: “Record mudslide that killed 43 exacerbated by rain, logging and lack of monitoring, says report”
