Digital Library: Fighting Zombie Foreclosures with UDAP Claims

August 27, 2026 — Article

State unfair and deceptive practices (UDAP) statutes offer a promising source of claims to challenge abusive “zombie” mortgages.  Many junior mortgages were originated in the years leading up to the 2007 subprime foreclosure crisis. When borrowers defaulted on these second mortgages during the crisis, loan holders stopped collecting because the homes were underwater, meaning there would be nothing for a junior mortgagee to recover after a foreclosure. Two decades later the values of these properties have increased, often substantially. Holders of dormant, or zombie, second mortgages are reviving them, demanding enormous sums including accrued interest, and threatening foreclosure. 

This article form NCLC’s Digital Library focuses on why zombie mortgage servicers and holders’ long-term abandonment of communication with consumers is both unfair and deceptive in violation of state UDAP statutes.