A zombie mortgage is a mortgage debt that consumers believed was forgiven or satisfied long ago but that still exists. These debts may have been written off by the lender and sold for pennies on the dollar to debt collectors. Zombie mortgages tend to particularly affect older borrowers, lower-income borrowers, and borrowers in communities of color. They are typically second mortgages, many of which stemmed from predatory lending in the years leading up to the Great Recession in 2007-2009. Homeowners may think that a mortgage debt was forgiven or was satisfied long ago by loan modifications or bankruptcy proceedings. Then years later, debt collectors reach out threatening foreclosure and demanding the homeowner pay the outstanding balance of the mortgage, along with years of interest and fees. Zombie mortgages got their name because they aren’t unlike zombies – a debt you thought was long gone, rising from the grave, and coming back to haunt you.

Zombie mortgages can be particularly problematic because they can lead to foreclosure and the loss of a home. Homeowners who are being threatened by zombie mortgage debt can contact organizations like the Consumer Financial Protection Bureau or the Connecticut Fair Housing Center for help. Loss mitigation options created by the loan servicer and the mortgage insurers can be important tools to help address the issue of a zombie mortgage.