'Zombie loan' has left me heartbroken & at risk of losing my dream home - we owed $139k out of nowhe
A couple is at risk of losing their dream home over an unexpected "zombie loan".
A zombie loan is a second mortgage that was said to be forgiven or written off but resurfaces later on and surprises homeowners with unpaid debt.
In short, it is an old loan with new collection actions.
California residents Adaina Brown and her husband are currently facing foreclosure due to a zombie loan, according to abc7.
Brown refers to the home as her "dream home" and worries that she'll have to give it up.
The couple bought the house in 2007 and needed two mortgages.
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Brown says that the mortgages were transferred multiple times to different companies during the 2007-2010 housing market crash.
Though her original lender assured her that the second loan was charged off, Brown claims that it showed up again but with a new company.
After seemingly sorting the issue out and receiving a letter stating that she was no longer responsible for the debt, Brown says the loan popped back up just a few months later.
This time, Specialized Loan Servicing said she owed $139,000 and filed against her property.
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"I get a notice of default and hundreds of Realtors called me about my house saying, do I want to sell it, it's in pre-foreclosure," Brown told acb7.
Specialized Loan Servicing faced criticism in 2020 for foreclosing against borrowers who were entitled to protection as suing or collecting debt that is far past the statue of limitations is illegal, according to bureau official Mark McArdle.
Brown is doing everything she can to avoid giving up her home because the loan company can sell it at any point in time.
Homeowners like Brown typically get hit with zombie loans because complicated loan structures resulted in them being unaware they had a second mortgage, according to Fortune.
Other people have thought that their second loan was combined with their first loan payments or forgiven.
It is common for people to say that they hadn't received statements on their second loan for years while paying their first mortgages.
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