Americans Are Losing Their Homes To Zombie Mortgages

Americans are indeed losing homes to so‑called “zombie” mortgages, which are mostly old second mortgages or home‑equity loans from before the 2008 housing crash that debt buyers are now aggressively enforcing through foreclosure.​

What a zombie mortgage is

A “zombie” mortgage is typically a second mortgage or home‑equity line that went into default years ago, then went quiet so long that borrowers believed it had been forgiven, written off, or wiped out in bankruptcy or modification. The debt, however, usually still exists as a lien, and because mortgages generally have long or no statutes of limitations on the lien, the holder can often still foreclose many years later.​

How people are losing homes

Debt buyers purchase portfolios of these old second mortgages from banks for pennies on the dollar, then hire servicers and law firms to demand full balances plus years of interest and fees. If homeowners cannot pay or settle, the holder can foreclose on the second lien and ultimately evict the occupants, even if the first mortgage is current and the family has significant equity.​

How widespread the problem is

Investigations have identified thousands of homeowners facing foreclosure or severe collection pressure over zombie second mortgages dating back to the housing‑bubble era. One large data analysis found that more than 600,000 pre‑crisis second mortgages may still pose a threat nationwide, representing tens of billions of dollars in potential claims.​

Why this is happening now

These loans were often uncollectable right after the crash because home values fell so far that a foreclosure would not recover anything for the second mortgage. With today’s much higher home prices, foreclosing on a long‑dormant second lien can now yield real money, so specialized “zombie” debt collectors have strong financial incentives to revive them.​

What at‑risk homeowners can do

Consumer regulators warn that anyone contacted about an old second mortgage should not ignore it and should request detailed validation of the debt. Legal aid groups and consumer lawyers point to defenses such as improper notice, time‑barred personal liability, prior bankruptcy treatment, and state‑level protections (for example, recent laws in California) that in some cases can block or limit zombie‑mortgage foreclosures.​