GET GEPHARDT

‘Zombie mortgages’ catching Utahns off guard

Sep 26, 2023, 10:46 PM | Updated: Sep 27, 2023, 10:34 am

WEST VALLEY CITY — Rachel Montes was about to lose her home to foreclosure even though she thought she was all paid up.

“It hurts,” she said. “It hurts because this is my home.”

Montes bought her home in 2005 using two mortgages. Four years later, she filed for bankruptcy and she got a loan modification to keep her house. She believed the 20% second mortgage was rolled into that deal along with the 80% primary mortgage, and for good reason.

“I never heard from the second mortgage company ever again,” she said.

But after 13 years, she heard from someone. She found a notice posted on her front door notifying her that her house was going to be auctioned off. It was that second mortgage, back from the dead.

The mortgage company told Montes she could save her home by paying $65,000 by the end of the month. It’s money she does not have.

“I’m on the brink of losing my home all over a simple piece of paper,” she said. “Had they sent me a paper every month stating this is still here, hey, you owe this, I would have paid it.”

Kent Winward is Montes’ attorney. They’re working to try and save her house.

Winward says he also represents several other clients dealing with what has been dubbed “zombie mortgages” — dormant for more than a decade. He says that many homeowners who went bankrupt in the Great Recession didn’t take care of their second mortgages in the process.

“Just because you work stuff out with your first, doesn’t mean you worked anything out with your second,” he said.

He thinks he knows why aggressive collection practices are happening now.

“Now that all of the house prices have gone up, they’re coming back,” he said.

For example Monte’s house has gone from a value of just over $155,000 in 2013 to more than $406,000 now, according to real estate website Zillow.

With this sort of equity, Winward says the owner of a second mortgage can foreclose and still make money on a home after paying off the first mortgage.

Often, the original lenders sold these mortgages to other investors — sometimes for just pennies on the dollar, meaning it’s even more profit for the lenders if they are able to collect, Winward said.

Utah’s statute of limitations on foreclosures is “six years after the due date or dates stated in the note,” according to the code.

Montes’ due date was March 1, 2020, which gives the lender until March 2026 to foreclose, says Winward, even though the mortgage company hasn’t so much as asked for a payment in 14 years.

“The law is really designed to protect the companies that are buying and selling these notes,” he said.

The loan servicer that owns Montes’ second mortgage is Planet Home Lending. The company has owned it since September 2021.

Montes said the company sent just one notice asking for payment and it went to an address where she has never lived. She did not get the notice until after her home was being foreclosed, she says.

Planet Hope Lending declined to answer questions about Montes’ foreclosure or the steps leading up to it citing concerns for her privacy.

In an email, a spokesperson told us they always “ensure full compliance with applicable laws and regulations in servicing consumer accounts.”

“It’s horrible thinking I could be out there homeless, you know,” Montes said.

Homelessness is not in Montes’ immediate future. She and Winward were ultimately able to negotiate with the lender and, through some legal wrangling, were able to save her home – though Montes will be forced to pay.

KSL 5 TV Live

Get Gephardt

According to new data from Carfax, at the end of last year, there were 609,000 vehicles with an unf...

Matt Gephardt

600,000 cars in Utah need recalls fixed, what is holding up the repair work?

According to new data from Carfax, at the end of last year, there were 609,000 vehicles with an unfixed recall in Utah.

5 days ago

Lynzee Delapaz explains to KSL’s Matt Gephardt how her car was damaged when it collided with anot...

Matt Gephardt and Sloan Schrage

Get Gephardt: Who’s legally responsible for damage when cars collide in a car wash?

A Grantsville woman’s car was damaged inside a car wash when the vehicle ahead of her went off the tracks. So, who pays for the damage?

6 days ago

Matt Gephardt speaking to Thelissa Mead about Hyundai not responding to her claims and getting her ...

Matt Gephardt

Get Gephardt helps Utah Hyundai owner seeking reimbursement for overestimated fuel economy

A major automaker was accused of saying their cars get better mileage than they really do, And they promised to pay their customers back. But when one Utah customer wasn't, she decided to Get Gephardt.

10 days ago

(FILE) A test dummy getting hit by an air bag during a crash test....

Matt Gephardt and Sloan Schrage, KSL TV

Thousands of cars equipped with faulty airbags on Utah roads as automakers issues ‘Do Not Drive’ warnings

Auto manufacturers have recalled over millions of Takata airbags because of their potential to explode and shoot out sharp metal fragments. And there are still thousands of those in cars across Utah.

19 days ago

sprinkler sprays on green grass...

Matt Gephardt and Sloan Schrage

Get Gephardt: Layton man demands refund for decades of charges for water he can’t access

Imagine finding out you've been paying nearly 40 years for rights to water you're not only not getting, but that you can't get, because the pipes for it don’t exist.

20 days ago

Danielle Addicott showing KSL's Matt Gephardt the fraud charges that were on her Wells Fargo accoun...

Matt Gephardt and Sloan Schrage, KSL TV

Get Gephardt helps Utah woman who says her bank refused to refund stolen money

A Park City woman says thousands of dollars were stolen from her bank account, but the bank refused to cover her loss. She decided to Get Gephardt.

24 days ago

Sponsored Articles

Photo courtesy of Artists of Ballet West...

Ballet West

The rising demand for ballet tickets: why they’re harder to get

Ballet West’s box office is experiencing demand they’ve never seen before, leaving many interested patrons unable to secure tickets they want.

Electrician repairing ceiling fan with lamps indoors...

Lighting Design

Stay cool this summer with ceiling fans

When used correctly, ceiling fans help circulate cool and warm air. They can also help you save on utilities.

Side view at diverse group of children sitting in row at school classroom and using laptops...

PC Laptops

5 internet safety tips for kids

Read these tips about internet safety for kids so that your children can use this tool for learning and discovery in positive ways.

Women hold card for scanning key card to access Photocopier Security system concept...

Les Olson

Why printer security should be top of mind for your business

Connected printers have vulnerable endpoints that are an easy target for cyber thieves. Protect your business with these tips.

Modern chandelier hanging from a white slanted ceiling with windows in the backgruond...

Lighting Design

Light up your home with these top lighting trends for 2024

Check out the latest lighting design trends for 2024 and tips on how you can incorporate them into your home.

Technician woman fixing hardware of desktop computer. Close up....

PC Laptops

Tips for hassle-free computer repairs

Experiencing a glitch in your computer can be frustrating, but with these tips you can have your computer repaired without the stress.

‘Zombie mortgages’ catching Utahns off guard