This transcript was prepared by a transcription service. This version may not be in its final form and may be updated.Jessica Mendoza: I'm well. How are you?Jessica Mendoza: Yesterday I had a call with a man named Harston Jones. He's 62, recently retired, and is based in Atlanta, Georgia. He lives in a home he bought in 1998.
Jessica Mendoza: Soon after Harston took out that second mortgage, the financial crisis of 2008 happened. Banks were getting bailed out, home prices were crashing, and a lot of people, like Harston, lost their jobs. Many stopped making payments on their home loans. Some banks stopped sending out statements for those loans, giving people the impression their loans had been canceled. Harston was one of them.
Jessica Mendoza: Banks all over the US started charging off second mortgages because it seemed like homeowners wouldn't be able to repay. And this is what Harston says he thought happened to his second mortgage. He had stopped payments on his second mortgage during the time when he was out of a job. When he was able to restart payments, he got back in touch with his bank.
Jessica Mendoza: Many homeowners, including Harston, thought they could move on too. Then one day, in the spring of 2020, a letter arrived for Harston. It was a pretty ordinary looking letter. Jessica Mendoza: It turns out that Harston's second mortgage hadn't died. His bank had sold his loan to new owners. Banks do this all the time.
Jessica Mendoza: But Harston wasn't going to give up his home without a fight. That's coming up. After receiving that letter from IslandCap's lawyers, Harston says he jumped into action. He started contacting attorneys to figure out what his options were. Jessica Mendoza: We ran this point about Harston's home equity past IslandCap, but didn't get a response. Our colleague Ben says that higher home prices are the reason so many zombie mortgages are coming out of the woodwork now. The US housing market has been on a tear lately. Home values have been soaring. And after years of making payments on their first mortgages, homeowners have built up a lot of equity in their homes.
Jessica Mendoza: This experience left Harston feeling like the system is unfair. He tried to settle with IslandCap, but he also sued them. Harston argued that IslandCap hadn't shown proof that it had the right to foreclose on his home, but his case hasn't succeeded.
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