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Zombie Debt Second Mortgages Are Back and Ready to Foreclose in 2023

Posted by Sami Thalji | Dec 27, 2022

As the consequences of COVID mortgage forbearances begin to unfold, homeowners are facing a new and potentially more serious challenge: "zombie debt" in the form of defaulted second mortgages and home equity lines of credit. A homeowner in Port St. Lucie, Florida, is one of many facing the possibility of losing her home to "zombie debt." This homeowner defaulted on a $37,000 second mortgage in 2008 during the Great Recession, and believed it had been rolled into a deal with the bank to lower her primary mortgage payments. However, last year she received a lawsuit from a real estate company that now owns her second mortgage, seeking a foreclosure on her home and claiming she owes over $53,000 on the balance of the mortgage, plus interest and late fees. "Zombie debt" collections, such as this one, are legal due to a 2016 Florida Supreme Court ruling that the statute of limitations on foreclosures does not end until five years after the last payment is due under the terms of the mortgage. In this case, the last payment was due on September 20, 2016, and the mortgage owner sued to foreclose on her property on September 15, 2021, just five days before the five-year deadline. Contact 5 found 20 similar cases in the area, with collection agencies attempting to collect on defaulted "zombie loans" that are at least a decade old. The sudden influx of these cases is likely due to the increased equity in homes, as real estate prices are now much higher than when the homeowners defaulted on their second mortgages over a decade ago. If you are contacted about a "zombie debt" from a second mortgage, it is important to seek legal counsel as soon as possible to be in the best negotiating position. These 2nd mortgage zombie debts will likely grow into a major issue for homeowners now that there is enough equity in many homes for them to be enforced. If you get collection letters or a foreclosure lawsuit from a second mortgage debt contact Florida Consumer Lawyers immediately. Our lawyers have decades of experience in mortgage foreclosure defense, negotiating loan modifications, and bankruptcy. 

About the Author

Sami Thalji

Sami Thalji is a native Floridian, born in Clearwater and raised in St. Petersburg, Florida. Sami graduated from Osceola High School in Seminole, Florida before attending and receiving both his Bachelor of Science and Juris Doctor from the University of Florida in Ga...


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