VIRGINIA BEACH, Va. — For many families, paying one mortgage is difficult enough.
So, imagine if you got a notice one day that said there was a second one in your name and if you did not pay tens of thousands of dollars immediately, the bank was going to take your home.
That is what happened to one family in Virginia Beach. Now, they’re going through litigation to keep their home and warn others about so-called “zombie mortgages.”
To understand the situation the family is in, I need to take you back to the early 2000s.
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During this time, people were taking out second mortgages on their home.
Interest rates were low, and they could use the second mortgage as a line of credit.
The first mortgage would cover most of the debt, and the second mortgage would cover the remaining 20%. However, when the market crashed home values went down, and people could not pay.
According to the Consumer Financial Protection Bureau, if you default on a second mortgage your home can be foreclosed on even if you are current on the first mortgage.
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“Sometimes there's situations where folks think that the mortgage, or a loan, is discharged for whatever reason, but then later they come to find out that's not true. That’s why they're commonly referred to as zombie mortgages. They kind of like come back to life, if you will,” says Brandon Ballard, a strategic litigation attorney at the Legal Aid Society of Eastern Virginia.
Ballard says that is what happened to the Virginia Beach family he's representing.
They did not want to go on camera but told me they were notified unexpectedly that their home was being foreclosed on.
“One of the things we're also [taking issue] with is the fact that, as is common in these cases, they don't tend to send monthly statements over this five- or 10-year period,” Ballard says.
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He says this happens because the old debts are sold cheaply to debt collectors.
They are often quiet for a while and then years later the mortgage company comes to collect the money -- all while accruing interest on the loan.
“It can get really high. Like, $10,000 $15,000 $20,000 depending how long they wait,” he says.
Ballard says his clients were never sent statements. In fact, they did not know this mortgage even existed.
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They have since learned their father took out the second mortgage, but he died before telling the family about it.
Now they are in a legal battle to keep their home and raise awareness about zombie mortgages for other families.
“If you think something wrong, immediately seek out help,” Ballard says.
Ballard tells me the second mortgage company alleges more than $36,000 is due on the family’s account with the principal balance being over $14,000.
For more information on how to fight off a zombie mortgage foreclosure, check out:
