Housing advocates press for 10-year limit on dormant second mortgages as 'zombie mortgage' foreclosures rise; lawyers and banks warn of legal side effects

Consumer advocates and housing attorneys asked the Banking Committee to approve a 10-year statute of limitations on dormant second mortgage foreclosures, arguing the change would protect homeowners surprised by long-dormant claims and help legal advocates triage limited resources.

"This would address from our perspective the issue around zombie mortgage foreclosures," said Jeff Gentes, an attorney who helps homeowners defend foreclosures, in support of House Bill 6,878. Gentes described cases in which borrowers lost track of a long-dormant second mortgage that had not issued statements or appeared on credit reports; when the note later surfaced, the borrower faced foreclosure for balances that sometimes had ballooned because of fees and accrued interest. He described instances where a loan originally for about $60,000 later was claimed to be $162,000 after years of…