Thousands of homeowners at risk
Teresa is one of a growing number of Americans facing so-called zombie mortgages, or second mortgages that resurface after borrowers think they've paid them off. These mortgages are often sold to debt collectors, who demand payment months or years later — often with retroactive interest and fees tacked on.
Many of those borrowers, like Teresa, thought the loans were resolved years ago and received no communication that the loans were still active.
“When I looked at this, and I, I mean, I didn't recognize it. I didn’t know what it was from,” Teresa told CBS News.
Teresa says between 2009 and January 2024, she never received a statement or communication about this debt. While federal law requires lenders to send statements for home loans, however, some don’t.
And it’s a problem all across the country. An NPR investigation found at least 10,000 old second mortgages in New York with foreclosure activity in the last two years.
And in Maryland, NPR found at least 500 loans that had been in default and unpaid for more than a decade — but now a company has taken the first step toward foreclosure.
Stop overpaying for home insurance
Home insurance is an essential expense – one that can often be pricey. You can lower your monthly recurring expenses by finding a more economical alternative for home insurance.
Officialhomeinsurance can help you do just that. Their online marketplace of vetted home insurance providers allows you to quickly shop around for rates from the country’s top insurance companies, and ensure you’re paying the lowest price possible for your home insurance.
Explore better ratesHow to find out if you have a zombie mortgage
First, it's important to understand that zombie mortgages are specifically second mortgages. These loans allow you to withdraw equity from your home and are often used for repairs, upgrades, or other large expenses. If you've never taken out a second mortgage, you don't have to worry about zombie mortgages.
If you have, start with your county’s public property records, which can often be accessed for free online. Googling your city or county with “public property records” should help you find the correct site.
Check if there’s a lien or notice of default on your property. If there is, you may have a problem. If you see a deed of reconveyance, the mortgage has likely been satisfied.
Another place to check is your tax returns. If the old mortgage was discarded, the lender would have sent you a 1099-C, often called a cancellation of debt. These tax forms must be included in your tax return, and indicate the second mortgage has been discarded.
If your property appears to have a zombie mortgage, it may be worth hiring a lawyer. Some states have laws that prevent debt collectors from taking action after a certain period of time. California, for example, has a four-year statute of limitations on most types of debt.
Sponsored
This 2 Minute Move Could Knock $500/Year off Your Car Insurance in 2024
Saving money on car insurance with BestMoney is a simple way to reduce your expenses. You’ll often get the same, or even better, insurance for less than what you’re paying right now.
There’s no reason not to at least try this free service. Check out BestMoney today, and take a turn in the right direction.
