Zombie Mortgages In Ohio: What Homeowners Need To Know About Old Debt Coming Back To Life
For Ohio homeowners, the economic downturn of the late 2000s might be something of the past. However, some of those old debts from that period are emerging again in an alarming manner. These are known as “zombie mortgages,” referring to the old debt of second mortgages or HELOCs that appear years later after the homeowner thought they had settled them. It’s important to know how such a claim emerges and what defenses are available against it.
Understanding zombie mortgages
A zombie mortgage is characterized by a second lien that never got formally cleared from a homeowner’s record in case of foreclosure or loan modification of a first mortgage. Many times, the homeowner had already foreclosed the property, settled the debt related to the first mortgage, or believed that all related obligations had been discharged.
The fact that the second lienholders did not receive payment from the homeowner during the process means that there was an outstanding obligation that remained. Years down the line, debt collectors and banks might come looking for the debt. Homeowners could be surprised by the collection letter, lawsuit, or even foreclosure of the property.
The legal issue with zombie mortgages
Issues related to zombie mortgages pose complicated questions within the scope of Ohio law. For instance, the statute of limitations applicable to the enforcement of a promissory note in Ohio expires after six years from the time of default. The determination of the exact date when the six-year period starts counting may vary from case to case.
Moreover, the statute of limitations prevents a lender from suing a homeowner on the grounds of the promissory note; however, it does not necessarily affect the lender’s right to foreclosure the mortgage lien. Thus, it is important to make a distinction between the promissory note and the mortgage lien.
Another important problem associated with zombie mortgages is related to the chain of title. The vast majority of such loans have already been resold multiple times to debt purchasers. They must prove their right to collect the debt by showing a proper chain of title. Therefore, the failure to produce proper documents can serve as an effective defense strategy.
Key takeaways
Zombie mortgages continue to be a problem for Ohio homeowners, and this matter requires urgent attention since it may turn out to be very dangerous. If you find yourself on the receiving end of collection efforts regarding a mortgage debt that you think might be too old to be pursued, there are several defenses available, such as the statute of limitations, insufficient paperwork, or even the wrong assignment of the debt.
If you get notice about an old mortgage you are unaware of, make sure you address this situation immediately, because otherwise, you risk getting a default judgment issued against you or face foreclosure again. Seeking advice from an experienced Columbus real estate lawyer will assist you in finding the best way forward.
In conclusion, although these zombie debts may seem to be the past’s legacy, they definitely remain to cause problems in the present.
Talk to a Columbus, OH, Real Estate Lawyer Today
Kohl & Cook Law Firm, LLC, represents the interests of Ohio homeowners who may be facing a zombie mortgage. Call our Columbus real estate lawyers today to schedule an appointment, and we can begin discussing your next steps right away.
