Homeowners are not the only ones benefiting from near-record property prices; debt collectors are also capitalising by enforcing collection on so-called 'zombie mortgages'. These are loans that homeowners believed were settled or paid off years ago, but which debt collectors have resurrected to demand payment, according to the Consumer Financial Protection Bureau (CFPB). A 2025 Bloomberg News investigation found more than 600,000 such mortgages are still active.
Attorney Leslie H. Tayne, a debt and finance expert, explained that rising home values have made these liens more valuable to collect. 'Since home values have increased in recent years, and some homeowners have built significant equity, these liens and second mortgages have become more valuable to collect, which has resulted in debt collectors pursuing them more aggressively,' she said.
Zombie mortgages originated from the chaos of the 2008 Great Recession. Many homeowners had second mortgages, including home equity loans and lines of credit. Some lenders sold these debts to collectors without informing the homeowners, and collectors waited for homes to build equity before pursuing payment. Home equity has surged from $5.3 trillion in 2009 to nearly $17 trillion today, making foreclosure more profitable.
Maryland resident Terence Hardin lost his home to a zombie mortgage. After buying a house in 2006 and taking out a $35,000 second mortgage, he modified his loan terms during the recession, believing it consolidated both loans. In 2023, a debt collector who had bought his second mortgage foreclosed without notice, and Hardin was evicted. 'All of the equity that I have built in my house was stolen right out from under us,' he told PBS.
If contacted by a debt collector about a zombie mortgage, experts advise asking for written validation of the debt. 'Don’t rush to agree to pay,' Tayne said. 'Instead, ask for the debt in writing so you can validate it and ensure the amount is accurate.' The debt agency is legally required to provide validation information, which can help identify scammers exploiting old loan paperwork.
