VIRGINIA BEACH, Va. – For many families, paying one mortgage is hard enough.
Imagine that one day you receive a message that there is a second one in your name and if you do not immediately pay tens of thousands of dollars, that the bank will foreclose on your house.
That’s what happened to a family in Virginia Beach. Now they’re fighting lawsuits to keep their homes and warn others about so-called “zombie mortgages.”
To understand the situation the family finds itself in, I have to take you back to the early 2000s.
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At that time, people took out a second mortgage on their house.
The interest rate was low and they could use the second mortgage as a line of credit.
The first mortgage would cover the majority of the debt, and the second mortgage would cover the remaining 20%. However, when the market collapsed, house prices fell and people were unable to pay.
According to the Consumer Financial Protection BureauIf you default on a second mortgage, your home could be foreclosed on, even if you already have a current mortgage on the first mortgage.
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“Sometimes there are situations where people think that the mortgage or a loan will be repaid for whatever reason, but later they find out that is not true. That’s why they are commonly called zombie mortgages. They like to come back to life, if you will,” said Brandon Ballard, a strategic litigator with the Legal Aid Society of Eastern Virginia.
Ballard says this is what happened to the Virginia Beach family he represents.
They didn’t want to appear on camera, but told me they had been unexpectedly notified that their home was being foreclosed on.
“One of the things we also take issue with is the fact that, as is common in these cases, they don’t tend to send monthly statements over a five- to 10-year period,” Ballard says.
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He says this happens because the old debts are sold cheaply to collection agencies.
They often go quiet for a while, but years later the mortgage company comes to collect the money while interest accrues on the loan.
“It can be very high. For example, $10,000, $15,000, or $20,000, depending on how long they wait,” he says.
Ballard says his clients never received statements. In fact, they didn’t even know this mortgage existed.
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They have since learned that their father took out the second mortgage, but he died before telling the family about it.
Now they are embroiled in a legal battle to keep their home and raise awareness about zombie mortgages for other families.
“If you think something is wrong, seek help immediately,” says Ballard.
Ballard tells me the second mortgage company claims more than $36,000 is owed on the family’s account, while the principal balance is more than $14,000.
For more information on how to fight zombie mortgage foreclosure, visit:
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