Thousands of homeowners face the risk of losing their homes due to “zombie mortgages” bought by companies — with some forcing foreclosures without their knowledge, according to a shocking report..
She purchased the home in 2005 for $365,000 with an “80/20” loan. One mortgage covered 80% of the home’s cost — $292,000 — while the other covered the remaining 20% — equal to $73,000. When she asked for the mortgage to be modified, she said she was informed by the company, which serviced both loans, that the second mortgage was forgiven.“I was actually in my kitchen. I was cooking dinner, and I was talking to a representative … and he told me I would never have to make a payment again on the second mortgage,” she said.McDonough said she no longer was receiving statements on the 20% loan. But recently she started getting phone calls asking for money.
Since housing prices were low after the crash, the mortgages were worthless. But once home values soared in the ensuing years, the investors who bought up the loans were looking to cash in.“Zombie mortgages” are loans that were sold for pennies on the dollar in the wake of the 2008 housing crisis.First American National bought her house at auction for $178,500 and is the legal owner of the home.
“We think that they have systemically and deliberately broken the law,” Todd Kaplan, an attorney with the nonprofit Greater Boston Legal Services, told NPR.