Up First from NPR The Sunday Story: Planet Money Investigates Zombie 2nd Mortgages
May 26, 2024
Robert Smith and Chris Arnold, NPR Planet Money correspondents, dive into the chilling world of zombie second mortgages. They unravel how homeowners can pay their bills faithfully yet still face unexpected foreclosure. With riveting personal stories, they highlight the emotional toll and legal complexities victims encounter. The discussion wraps up with insights on how homeowners can fight back against predatory lending practices and navigate the murky waters of dormant debts that suddenly awaken.
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Karen's Foreclosure Nightmare
- Karen McDonough, a registered nurse, faced foreclosure on her home despite being current on her mortgage payments.
- This was due to a "zombie second mortgage" from the 2008 housing crisis.
Two Mortgages, One Problem
- During the housing bubble, banks offered two mortgages to eliminate down payments, making homeownership seem accessible.
- The second mortgage covered the down payment but became a risk during the financial crisis.
The Adjustable-Rate Time Bomb
- Adjustable-rate mortgages, common during the housing bubble, led to increased payments and foreclosures.
- Government intervention with loan modifications helped some homeowners like Karen with their first mortgage.