zombie mortgage

Zombie Second Mortgages and How to Protect Yourself

If you find the prospect of the Walking Dead to be terrifying, pray you never find yourself facing a Zombie Second Mortgage -- that old second mortgage you thought was dead and long gone that suddenly rises from the grave to feast on your newly acquired equity and threaten you with imminent foreclosure. It is every homeowner’s nightmare! The first step in fighting back is to understand the threat.

What is a Zombie Second Mortgage?

A zombie second mortgage is an old junior mortgage that you thought went away years ago. Maybe you stopped paying your first and second mortgage and sought help through a loan modification. Or, you may have sought protection through bankruptcy and received a discharge of debts. But, unless you successfully striped the lien in a Chapter 13 Bankruptcy, your second mortgage only appeared to be dead. The mortgage holder simply stopped contacting you - no letters, no statements and no demands or threats. You thought it was gone for good, but, unfortunately, it wasn’t.

So, Why are these Zombies Coming Back Now?

Quite simply, zombie second mortgages can smell equity from miles away. With rising real estate values comes substantial equity in the home. The otherwise dormant zombie second mortgages now have a reason to start making demands. If you have modified your first mortgage and have been paying on it for years, then you have increased your equity even more and have demonstrated your commitment to keeping your home. That provides the perfect situation for a zombie second mortgage to threaten you with foreclosure.

What Happens in a Zombie Second Mortgage Foreclosure?

When a zombie second mortgage conducts a foreclosure auction, your home with either be sold to an investor or the zombie mortgage holder will become the new owner. The first mortgage will remain as a lien against your property, so the new owner will need to sell the property in order for the first mortgage lien to be satisfied. This means that you will need to be removed from the home either through eviction or voluntary agreement. It is a sad and difficult process for any homeowner.

Options to Deal with Zombie Second Mortgages.

If you are facing a threat from a Zombie Second Mortgage, you MUST take immediate action. If there is a foreclosure auction already scheduled, immediately contact a real estate attorney to seek the emergency protections you are entitled to under the law. You have a number of options, including refinancing your home or securing a reverse mortgage to remove the second mortgage. A reverse mortgage could be a very good solution for those homeowners over 62 years old who have substantial equity. Alternatively, you could seek a forced repayment plan through bankruptcy. A loan modification might be possible as well. In addition, there are state programs like the California Mortgage Relief Program that may provide funds in limited circumstances and for limited period of time. If none of these options are available for your situation, then listing and selling your home with an Attorney/Realtor will provide the protection you need and save your equity before the zombie second mortgage steals it through foreclosure.

Watch Out for Deficiency Liability.

Zombie Second Mortgages can present unique problems related to post-foreclosure deficiency claims. For example, you may find that you owe money for a deficiency claim on a junior mortgage even after a senior mortgage completes a foreclosure. An Attorney/Realtor can help you determine if you fall under the protection of California’s anti-deficiency laws or other protections, or if it is more advantageous for you to consider either filing bankruptcy or selling your home and putting money in your pocket.

Attorney/Realtor® Representation Without Any Extra Costs.

Real estate transactions can get very complicated, but even more so when you are facing default or foreclosure by a Zombie Second Mortgage. At Lawyers Realty Group, we believe that every California homeowner deserves the expert representation of a skilled real estate attorney - completely free of charge - as well as the know-how of an experienced Realtor who can, if need be, coordinate the sale of the home. No one should have to navigate these complicated transactions and risk further financial harm without having an Attorney/Realtor by their side.

Whether You Have Equity Or Are Contemplating A Short Sale, You Need An Attorney/Realtor® To Fully Protect Your Financial Interests.

If you have significant equity in your home and are facing foreclosure by a Zombie Second Mortgage, an Attorney/Realtor has the tools and expertise to successfully postpone or cancel the foreclosure auction and fast-track the listing and sale of your property for the highest possible price.

Alternatively, if you’re in a situation where you owe more on the home than it is worth, working with an Attorney/Realtor can help you navigate the complex short sale process and protect you from all future mortgage liability. An Attorney/Realtor has the skill and experience to negotiate the maximum amount of relocation money possible to help you achieve a fresh start, as well as ensure that there will be no loose ends that come back to threaten you in the future.

Contact Lawyers Realty Group Today at (949) 264-0966

Never let anyone pressure you into listing or selling your home without talking to an attorney first. Reach out to our expert Attorney/Realtor today at (949) 264-0966 for a free legal analysis of all of your options. We will outline the best course of action for you without any cost or obligation.

Lawyers Realty Group was established over 20 years ago to provide a higher level of professional representation for homeowners in difficult situations. By combining expert legal representation with comprehensive real estate transactional services, homeowners receive a higher level of service and protection than traditional Realtors can provide – and we charge no more than an ordinary real estate agent.