‘Zombie Debt’: Homeowners face foreclosure on old mortgages

By MICHAEL HILL
Associated Press

A growing number of homeowners say they are being blindsided by recent foreclosure actions on their homes over second loans that were taken out more than a decade ago. Collectors say the loans were defaulted on years ago and the money is legally owed. Some homeowners believed their second loans were rolled in with their first mortgage payments or forgiven. Now they’re being told the loans weren’t dead after all. Instead, they’re what critics call “zombie debt.” Attorneys for homeowners say the loans are typically owned by purchasers of troubled mortgages and are being pursued now because home values have increased and there’s more equity in them.