Community bank offers to forgive home loan debt for customers impacted by Oso mudslide
About 40 homes were destroyed in the Oso landslide and many who lost their houses probably still owe payments on their home loans.
Lyn Peters of the state Department of Financial Institutions says mortgages are legally binding contracts, even if the homes are gone. But one community bank says if insurance won’t help their customers impacted by the slide, they’re willing to forgive their debt.
“What Coastal has said is we’re going to step up if insurance does not cover your loss, you’ve got a loan with Coastal, and you’re directly affected by this mudslide, we will relieve you of that debt,” Eric Sprink, CEO of Everett-based Coastal Community Bank, tells KIRO Radio’s Dori Monson.
The bank has locations in Arlington and Darrington, along with eight other branches in the region, and says they believe it’s their duty as part of the community to assist their customers.
“We think it’s the right thing to do. We do not see it as an act of charity or overly kindness. It’s just the right thing to do. The community needs to rebuild. The community needs to get back on its footings.”
While Sprink has heard some larger banks are offering a period of reprieve on mortgage payments, he doesn’t know if that’s enough.
“Three months of waiving payments, I don’t know if that will really help,” says Sprink. “It’s not really addressing the main topic of, hey what is going to happen to the mortgage on the house. That is the, in some cases, $100,000, $200,000, $300,000 question. That needs to be addressed.”
It will of course be a monetary loss for the bank, but Sprink says the bank is healthy enough to handle it and they see this as a good way to use their reserves.
“Every month, every quarter, every year we put money aside for loan-loss reserves for debt that’s unable to be paid back,” says Sprink. “We’ll have to re-reserve for that, but we believe we’re in a position to help these folks and it is the right thing to do.”
Sprink believes not only the individual homeowners will benefit, but so will the rest of the region.
“The community will win. Coastal Community Bank will benefit from that. Snohomish County will benefit from that. So it’s just that collective effort that I hope my other banking brethren look at as well – to say hey a healthy micro economy up there is good for all, so we want to do our part.”
Monson says it’s a wonderful thing that Coastal Community Bank has chosen to do for its customers impacted by the slide.
“I think it’s extraordinary in this time, when companies do this sort of thing,” says Monson. “But I think you’re just showing a shining light to everybody in your industry with this gesture, and I do hope it puts a little bit of pressure on the other banks because it’s a great gesture on your guys’ part.”
The Associated Press contributed to this report.