Zombie mortgage may force disabled vet from home

There's no question Sean and Martie Howard have been through a lot. The former Marine was diagnosed with ALS in 2016 and is now disabled, living in a wheelchair. 

His wife Martie had to stop working to care for him and their autistic daughter. Their three adult children moved into the Simi Valley home Sean bought in the 80s to help out. Somehow, they’ve managed to keep things going, financially and emotionally. That is, until they got a call from Specialized loan Servicing LLC about a second mortgage they thought was disposed of years ago, when they refinanced the house. 

The second mortgage had been sold by banks for over ten years, without them making a payment on it. SLS says they owe about half a million dollars and would lose their home if they didn’t make arrangements to pay, including approximately $63,000 as a down payment before the end of the year.

"It’s a scam, and it’s legal," said Richard Szerman. The real estate agent from Santa Clarita, works with people fighting foreclosures, especially so-called zombie, or ghost mortgages. He explains that banks sell these loans for pennies on the dollar after declaring them as a 'loss’ to the IRS. The banks wait for years, almost twelve in the Howard’s case. During that time, the couple continued paying what they thought was their mortgage.

"These companies wait until the values go up enough and hit the homeowner with a bill and threaten to foreclose on them, he added.

It’s legal, and something Szerman has been fighting for years, especially because banks don’t have to prove they notified homeowners of the loans, as they get sold, so many people don’t even know they exist.

SLS tells FOX 11 that the loan is on hold as they try to come up with a resolution, but county records show the company still filed a notice of default against the Howards, which they and Szerman equate to putting a gun against their head, and saying they are waiting to pull the trigger.

Szerman adds that he is fighting dozens of these ghost loans in California. Until politicians make banks prove they are notifying customers and file official title papers for these loans as they are sold and bought. Szerman says the situation will not change because the companies are making a lot of money, at the expense of people like the Howards.

Richard Szerman is a realtor and foreclosure prevention advocate who works for Radius Agent Realty in Santa Clarita. You can reach him at 661-714-1400.