Zombie mortgages — those old second mortgages not heard from in years that suddenly resurface with foreclosure threats — are finally under attack in California. On June 30, 2025, Governor Gavin Newsom signed a bill that provides critical protection for homeowners facing these ominous liens. The bill adds Section 2924.13 to the California Civil Code, which gives homeowners powerful tools to fight back.
What Is a Zombie Mortgage?
A zombie mortgage is a subordinate (junior) lien — usually a second mortgage or home equity loan — that homeowners haven’t heard from in years despite being in default on the loan. The lack of demands or communication of any kind misleads some homeowners to falsely believe that their old mortgage was either cancelled, removed in bankruptcy, or simply forgotten. However, the frightening truth is that these mortgages do not expire or disappear, and the resulting liens remain and can be foreclosed upon for decades after a default.
Unfortunately, many homeowners are now learning the hard way just how aggressive these defaulted mortgage holders can be. Original lenders often sell these defaulted mortgages to “vulture investors” who can afford to wait years for market conditions to improve before demanding payment. With California’s skyrocketing home values, these bottom-feeding debt collectors now find themselves in an extremely strong position to force homeowners to either pay up or face imminent foreclosure.
How the New Law Protects Homeowners
California’s new law, Section 2924.13 of the Civil Code, specifically targets zombie mortgage practices and provides homeowners with new leverage by creating stricter foreclosure requirements.
New Legal Requirements for Foreclosure
The law requires these second liens to comply with the following rules prior to foreclosure:
- Record a certification under penalty of perjury that the servicer (and all prior servicers) avoided “unlawful practices,” such as failing to communicate with borrowers for three years in a row.
- State all instances when the servicer (and all prior servicers) committed any of the unlawful practices listed.
- Notify borrowers that they may petition a California court for relief before a foreclosure sale if they believe any misrepresentation or unlawful practice occurred.
Unlawful Practices Include:
Specifically, Section 2924.13 deems the following inactions unlawful regarding a subordinate mortgage:
- Failing to communicate in writing with the borrower for at least three years.
- Failing to provide notices of loan servicing or ownership transfers.
- Foreclosing or threatening to foreclose after advising the borrower that the loan was written off or discharged, including by sending an IRS Form 1099.
- Foreclosing or threatening to foreclose after the statute of limitations expires.
- Failing to provide a periodic account statement when required to do so by law.
These new requirements make it far more difficult for servicers to foreclose without proper documentation, especially when prior servicers are uncooperative or no longer exist. This creates a critical window for homeowners to take action.
What This Means for You
This law went into effect immediately. If a zombie mortgage is threatening your home, you now have leverage—but using it requires legal expertise.
Powerful Remedies for Borrowers
- Homeowners can petition a court to halt a foreclosure if servicers violated the law.
- Courts may strike arrears, block foreclosures, or impose other remedies.
- Post-sale, borrowers can challenge foreclosures if certifications are missing or inaccurate.
- If the lender has initiated a judicial foreclosure, the borrower may identify the unlawful practices from Section 2924.13 as an affirmative defense.
Borrower Remedies After Sale
The law also provides remedies to the borrower after the foreclosure sale has been conducted. Specifically, a borrower may file suit to have the nonjudicial foreclosure sale set aside if (1) the certification was not recorded at all, (2) the certification indicates an unlawful practice occurred during the life of the loan, or (3) the borrower believes there was a misrepresentation of the compliance history in the certification.
Contact Lawyers Realty Group Today at (949) 264-0966
Fight Back Against Zombie Mortgages
Don’t fall victim to a zombie mortgage! Reach out to our expert Attorney/Realtor today at (949) 264-0966 for a free legal analysis of all of your options. We will outline the best course of action for you without any cost or obligation.
Lawyers Realty Group was established over 20 years ago to provide a higher level of professional representation for homeowners in difficult situations. By combining expert legal representation with comprehensive real estate transactional services, homeowners receive unparalleled service and protection.
Contact us today for a free consultation:
- Phone: (949) 264-0966
- Website: www.lawyersrealtygroup.com
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Related Resources:
Zombie Second Mortgages and How to Protect Yourself
“Zombie” Second Mortgages Come Back to Haunt California Homeowners
