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The Consumer Financial Protection Bureau (CFPB) issued guidance on debt collectors who threaten to foreclose on homes with mortgages past the statute of limitations, stating such actions could be in violation of the Fair Debt Collection Practices Act and its implementing regulation.

The CFPB said that it issued the advisory opinion following a series of actions by debt collectors attempting to foreclose on so-called zombie mortgages that were originated in the years prior to the 2008 financial crisis. The products – also known as piggyback mortgages and 80/20 loans – involved a first lien loan for 80% of the value of the home and a second lien loan for the remaining 20% of the home’s valuation.

The CFPB noted that most lenders did not pursue homeowners on second mortgages, but instead sold them to debt collectors for pennies on the dollar. These debt collectors, who made no communication with homeowners during the intervening years, have demanded the mortgage balance, interest and fees from the homeowners, threatening foreclosures for those who do not or cannot pay.

“Some debt collectors, who sat silent for a decade, are now pursuing homeowners on zombie mortgages inflated with interest and fees,” said CFPB Director Rohit Chopra. “We are making clear that threatening to sue to collect on expired zombie mortgage debt is illegal.”