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Foreclosure Articles

Zombie Mortgages In New Jersey

ByJoshua Denbeaux September 30, 2024

Zombie second mortgages can be a major concern that you might not even know about. With a zombie mortgage, you can risk losing your home if you’re unaware of the mortgage and don’t fight the foreclosure.

It’s important to act quickly with a zombie mortgage to defend yourself from foreclosure and eviction. An attorney can help you examine your options for protecting your home from foreclosure.

Contact Denbeaux Law today to discuss how we may be able to help you stop foreclosure and keep your home. 

What Is a Zombie Second Mortgage?

A zombie mortgage is a second mortgage that homeowners believe has been satisfied or forgiven. 

A second mortgage becomes a zombie mortgage when it comes back years later with a lender looking for payment or trying to foreclose. Lenders may attempt to collect years worth of missed payments and interest to take ownership of a home through a zombie foreclosure.

In many cases, no mortgage statements have been sent for the second mortgage in years. 

Homeowners may believe that their second mortgage was part of a loan modification they received on their first mortgage.

What Is a Zombie Foreclosure?

A zombie foreclosure is a foreclosure on a zombie second mortgage.

The foreclosure process for a second mortgage follows legal proceedings similar to the primary mortgage foreclosure process.

If a homeowner defaults on a second mortgage, the lienholder can initiate foreclosure, even if the homeowner is currently on their primary mortgage.

Lenders typically do not foreclose on second mortgages because primary mortgages take lien priority on being repaid after foreclosure. However, with rising house prices, second-mortgage foreclosures have become more common. 

How To Fight a Zombie Foreclosure

You may be able to fight a zombie foreclosure in various ways. The options available to you may vary based on your lender and your financial situation. 

Negotiate

You may be able to negotiate a settlement with your second mortgage lender. Usually, a settlement requires a lump sum payment to satisfy the debt. This can be an expensive option, but if you can afford to pay off your zombie mortgage, it will allow you to keep your home.

Loan Modification

Lenders may offer loan modifications for zombie mortgages. With a loan modification, you would pay off your second mortgage over time. If you get a loan modification, you most likely will have to pay interest and fees that have been added to the cost of the loan.

Legal Defense

If you are unable to pay off the zombie mortgage, or the lender is unwilling to negotiate with you, there may be options for a legal defense.

Federal regulations require mortgage lenders to send monthly mortgage statements. 

In many zombie mortgage situations, debt collectors purchase a loan that the homeowner hasn’t received notices on in years and add years of late fees and interest to the total loan amount. Lender action like this could create a defense to a zombie mortgage foreclosure.

A foreclosure attorney can review your situation and help you determine if you have a case for a legal defense.

Contact a Foreclosure Attorney Today

Finding out you have a zombie mortgage trying to foreclose on your home can be scary and overwhelming. It’s important to act quickly to protect your home.

An attorney can help you sort through the situation and explore all of your available options to help you keep your home if you’ve had a second mortgage and have received a notice about owing money to a mortgage company. 

Contact Denbeaux Law today to learn more about how we may be able to help you protect your home from a zombie mortgage.

Joshua Denbeaux

Attorney

Joshua Denbeaux is a Partner at Denbeaux & Denbeaux, concentrating his practice on financial consumer rights issues and foreclosure defense. He has substantial experience in legal matters related to foreclosure, loan modification, debt collection, and the prosecution of cases related to predatory lending. Mr. Denbeaux received his law degree in 1994 from Seton Hall University after completing his undergraduate work at The College of Wooster. Mr. Denbeaux is licensed to practice in the United States District Courts for New Jersey.

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