How ‘zombie loans’ cost your home

A San Marcos man sold the house he had lived in for nearly 20 years because of a small loan he took a few years ago.

They have been called “Zombie Loans”. This is a loan that you think you have forgiven, but the company is just waiting to collect.

Ramiro Gama purchased his home in 2003, several years after moving to the United States from Mexico. He said he never imagined having a home of his own, but he worked hard to achieve it.

A few years later, he secured a $27,000 loan against his home.

“I didn’t expect this to happen,” said Gama.

It was auctioned off for that $27,000 loan. He says the 2008 recession wiped out the company, so he thought he was fine. Then in 2016 another company showed up trying to collect his debt.

“Many years have passed, and in 2021 we started receiving letters,” Gama said.

But he says he stopped paying because he distrusted the company. He was then told by a third company that they were foreclosing on his house.

His house sold at auction for about $300,000. The $27,000 loan was paid off and Gama was given the remaining check. He still owes about $230,000 in mortgages.

Octavio Cardona Roya said, “It’s a common occurrence, unfortunately, it’s been called a zombie mortgage these days.

Cardona is a consumer attorney. Many of these small loans seemed to disappear during the 2008 recession, he says, when in fact they were simply taken over by new companies.

“They sold hot,” said Cardona. “Sometimes you don’t know who you owe money to.”

He also says loans were sometimes purchased, but the home was worth so little that the new owner didn’t foreclose or try to collect payments. The money is likely to be used to pay off the mortgage.

“If it’s the second [loan] You can have it all with your first loan,” Cardona said.

Cardona said the companies holding these small loans kept people paying off their mortgages and waited for home prices to rise. He says you should check if you have old loans that you thought were forgiven.

“Sometimes silence is a red flag,” Cardona said.

If your home has ever been listed as collateral, you need to make sure the debt has been settled. I can confirm.

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