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WEST VALLEY CITY — Rachel Montes was about to lose her home to foreclosure even though she thought she was all paid up.
"It hurts," she said. "It hurts because this is my home."
Montes bought her home in 2005 using two mortgages. Four years later, she filed for bankruptcy and she got a loan modification to keep her house. She believed the 20% second mortgage was rolled into that deal along with the 80% primary mortgage, and for good reason.
"I never heard from the second mortgage company ever again," she said.
But after 13 years, she heard from someone. She found a notice posted on her front door notifying her that her house was going to be auctioned off. It was that second mortgage, back from the dead.
The mortgage company told Montes she could save her home by paying $65,000 by the end of the month. It's money she does not have.
"I'm on the brink of losing my home all over a simple piece of paper," she said. "Had they sent me a paper every month stating this is still here, hey, you owe this, I would have paid it."
Kent Winward is Montes' attorney. They're working to try and save her house.
Winward says he also represents several other clients dealing with what has been dubbed "zombie mortgages" — dormant for more than a decade. He says that many homeowners who went bankrupt in the Great Recession didn't take care of their second mortgages in the process.
"Just because you work stuff out with your first, doesn't mean you worked anything out with your second," he said.
Had they sent me a paper every month stating this is still here, hey, you owe this, I would have paid it.
–Rachel Montes, homeowner
He thinks he knows why aggressive collection practices are happening now.
"Now that all of the house prices have gone up, they're coming back," he said.
For example, Monte's house has gone from a value of just over $155,000 in 2013 to more than $406,000 now, according to real estate website Zillow.
With this sort of equity, Winward says the owner of a second mortgage can foreclose and still make money on a home after paying off the first mortgage.
Just because you work stuff out with your first, doesn't mean you worked anything out with your second.
–Kent Winward, Montes’ attorney
Often, the original lenders sold these mortgages to other investors — sometimes for just pennies on the dollar, meaning it's even more profit for the lenders if they are able to collect, Winward said.
Utah's statute of limitations on foreclosures is "six years after the due date or dates stated in the note," according to the code.
Montes' due date was March 1, 2020, which gives the lender until March 2026 to foreclose, says Winward, even though the mortgage company hasn't so much as asked for a payment in 14 years.
"The law is really designed to protect the companies that are buying and selling these notes," he said.
The loan servicer that owns Montes' second mortgage is Planet Home Lending. The company has owned it since September 2021.
Montes said the company sent just one notice asking for payment and it went to an address where she has never lived. She did not get the notice until after her home was being foreclosed, she says.
Planet Hope Lending declined to answer questions about Montes' foreclosure or the steps leading up to it citing concerns for her privacy.
In an email, a spokesman told us they always "ensure full compliance with applicable laws and regulations in servicing consumer accounts."
"It's horrible thinking I could be out there homeless, you know," Montes said.
Homelessness is not in Montes' immediate future. She and Winward were ultimately able to negotiate with the lender and, through some legal wrangling, were able to save her home – though Montes will be forced to pay.
