‘Zombie debt’: Homeowners face foreclosure on old mortgages

Rose Prophete thought the second mortgage loan on her Brooklyn home was resolved about a decade ago — until she received paperwork claiming she owed more than $130,000. “I was shocked,” said Prophete, who refinanced her two-family home in 2006, six years after arriving from Haiti. “I don’t even know these people because they never contacted me. They never called me.” Prophete is part of a wave of homeowners who say they were blindsided by the start of foreclosure actions on their homes over second loans that were taken out more than a decade ago. The trusts and mortgage loan servicers behind the actions say the loans were defaulted on years ago. Some of these homeowners say they weren’t even aware they had a second mortgage because of confusing loan structures. Others believed their second loans were rolled in with their first mortgage payments or forgiven.