By Patricia Ellams, Foreclosure Specialist at The Waterfront Project
Zombie Mortgage Loan foreclosures are on the rise in New Jersey. If you’ve recently discovered a
long-forgotten second mortgage or Home Equity Line of Credit coming back to haunt you, it’s
important to understand your rights.
Can I Lose My Home to a Zombie Mortgage?
Yes, it’s possible to lose your home due to a zombie mortgage foreclosure. A zombie mortgage
is a mortgage that had been in default and has been dormant for several years. This is most
likely because the property value had been too low to pay off the first mortgage and leave
anything for the second (now Zombie) mortgage. In many of these cases, the borrowers believed
that the loan had rolled into a modification of the first mortgage or resolved some other way.
Now that property values have increased, these loans have come back to life. If they are not
defended, these foreclosures will cause homeowners to lose their homes or be forced to pay
interest and fees that accrued during the time the loans had been dormant.
How to Fight a Zombie Mortgage
Zombie Mortgage foreclosures often seek to collect interest and fees that accrued during the
time the loans had been dormant. It is possible to bring claims and defenses under the New
Jersey Consumer Fraud Act (NJCFA), The Truth in Lending Act (TILA) and The Fair Debt Collection
Practices Act (FDCPA) to prove that the Zombie Mortgage is seeking to violate the law in their
attempt to collect. Taking prompt action, especially with legal guidance, can be crucial in
effectively managing a zombie mortgage to prevent unexpected financial consequences.