NORFOLK, VA (October 2, 2024) The Legal Aid Society of Eastern Virginia and Kelly Guzzo, PLC have jointly filed a federal lawsuit against a mortgage company, mortgage servicer, and trustee, alleging wrongful foreclosure actions upon a client’s home. The client, Ms. Powell, a 70-year-old widow, took over the household’s financial responsibilities, including the primary mortgage payments, after her husband became incapacitated following a stroke in 2013. Throughout this period, Ms. Powell diligently managed her primary mortgage, unaware that a second mortgage was outstanding.
In July 2022, Ms. Powell received an unexpected communication demanding payment for a second mortgage. Believing it to be a scam, she consulted her primary mortgage servicer, which confirmed it had no knowledge of the demand. This led Ms. Powell to dismiss the communication as fraudulent, given that it was issued by an unfamiliar entity.
Unfortunately, a second mortgage was taken out by Mr. Powell in 2007. This situation represents a case of what is known as a “zombie second mortgage.” NPR recently highlighted this issue in an interview with Kristi Kelly of Kelly Guzzo, explaining how these old, forgotten, or unknown mortgages resurface when bought by debt collectors for minimal amounts and then inflated with exorbitant interest and fees.
The complaint filed on Ms. Powell’s behalf contends that her home was sold at a foreclosure auction for a significantly undervalued price to the second mortgage company. It further alleges that Ms. Powell did not receive a proper pre-acceleration notice and that the mortgage company improperly levied thousands of dollars in interest and fees over a decade without providing her with monthly mortgage statements.
If you believe you are facing a similar problem and think you may qualify for the Legal Aid Society of Eastern Virginia’s services, please apply for assistance by visiting us online at www.laseva.org, by calling our Eligibility Screening Line at (757) 827-5078, or by walk-in at one of our locations.