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Consumer advocates urge state action on 'zombie' second mortgages after testimony of homeowners and mediators
Summary
Consumer advocates told the Joint Committee on the Judiciary that state action is needed to prevent debt buyers from reviving dormant subordinate mortgages and pursuing foreclosure without adequate notice to homeowners.
Consumer advocates described a pattern they called "zombie" second mortgages: subordinate loans that were written off or sold after the 2008 crash, had no active servicing or borrower communication for years, and later resurfaced when housing values rose — sometimes demanding repayment and threatening foreclosure.
"In the majority of the cases I mediated, borrowers received no notification that their loan had been sold," said Chuck…
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