General Discussion

Homeowners think these loans are long dead. But then the loans come back to life because they get bought up, sometimes for pennies on the dollar, by debt collectors. These companies often tack on a mountain of retroactive interest and fees, even though that can be legally dubious in some cases, and then move to collect and foreclose on people's homes.

And an NPR investigation found that the practice is widespread.

NPR looked at foreclosure data across several states where records were available. In New York, NPR found at least 10,000 old second mortgages that foreclosure activity had been initiated on in just the past two years. Those loans originated back during the subprime-lending housing-bubble days of 2004 to 2008.

In Maryland, where more detailed information was obtainable, NPR found at least 500 old second mortgages that had been in default and unpaid for more than a decade but now a company has taken the first step toward foreclosure. In other words, more than 500 zombie mortgages in a single state that are now coming back to life as companies file a form with the state indicating they intend to foreclose on the property

https://www.npr.org/2024/05/10/1197959049/zombie-second-mortgages-homeowners-foreclosure