Planet Money Zombie mortgages are coming back to life
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May 10, 2024 A woman experiences a shocking foreclosure on her home despite being current on her mortgage after 17 years. It turns out she's facing a 'zombie mortgage'—a debt she thought was settled but has come back to haunt her. The podcast delves into the resurgence of these unspoken financial nightmares and the legal implications for affected homeowners. It also illustrates the struggles of individuals navigating complex legal battles to reclaim their homes, shedding light on a troubling trend in the housing market.
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Karen's Foreclosure
- Karen McDonough found people on her lawn trying to sell her house.
- Despite paying her mortgage, she faced foreclosure due to a "zombie" second mortgage.
Two Mortgages
- During the housing bubble, two mortgages were common: one large and one smaller.
- The second, smaller mortgage often covered the down payment, making homeownership seemingly accessible.
Mortgage Time Bomb
- Adjustable-rate mortgages during the housing crisis had hidden dangers.
- Interest rates would increase dramatically after a few years, leading to unaffordable payments and foreclosures.