A COUPLE fears losing their home of 18 years, despite paying their mortgage on time.
Sophiea and Andre Lipford of Alexandria, Virginia, fell into what is known as a “zombie mortgage.”
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After raising their children in their home for 18 years, the couple learned their home was for sale.
“I saw this foreclosure letter and I panicked and started crying,” said Sophiea NPR.
“We’re going to lose our house,” said the surgical technician.
A debt collector revived your decades-old dead mortgage loan by purchasing it.
This is known as a zombie second mortgage, where collectors add huge fees and interest that can lead to property foreclosure.
Millions of homeowners who underwent modifications to their mortgages during the 2008 housing crisis are seeing past-due loans come back to haunt them.
“This really is a problem,” Andrea Bop Stark, an attorney at the National Consumer Law Center, told the news outlet about zombie second mortgages.
The attorney noted that with liens recorded on properties with these mortgages, foreclosures are an easy process.
In New York, over the past two years, at least 10,000 zombie second mortgages have been linked to foreclosures, according to NPR, and all dated between 2004 and 2008.
“The numbers to me are very scary,” Stark said.
In a warning to homeowners who had second mortgages, David Gordon, co-founder of ARC Private Equity, said investors are “waiting on the sidelines” to collect.
Gordon, who has bought many dead mortgages, explained his point of view to NPR.
“An investor deserves to get his money back and there is real money at stake,” he said.
Although several homeowners who have fallen victim to zombie loans say they were told their second mortgage was waived, Gordon explains that this is common but often not true.
“They still exist,” he said of many cases.
“It’s not like they left. People were waiting in the wings to demand this at some point.”
What is a zombie mortgage?
A zombie mortgage is a mortgage debt that was believed to have been forgiven or paid off long ago, but still exists.
These old debts can be written off by the creditor and sold, often for pennies on the dollar, to debt collectors.
Sometimes mortgage companies stop sending payments and homeowners believe the debt is dead.
However, debt collectors arrive years later to collect the debt.
As property values increase, debt collectors threaten foreclosure and other collection actions while asking for the outstanding balance – plus fees and interest.
Source: Consumer Finance
With home prices rising, foreclosures cause properties to sell for much less than they are worth.
“Nothing is free in this world, and if you signed up for a loan, you know what you signed up for,” Gordon said.
“It is what it is.”
Meanwhile, other homeowners are trapped in their homes by their mortgages, in what is known as a “golden handcuffs” situation.
This story originally appeared on The-sun.com read the full story
