PORT ST. LUCIE, Fla. — Charmaine Dixon lost her mother this summer.
Now, she fears she'll soon lose her Port St. Lucie home.
"I'm in trouble, and I don't know what to do," she said. "And I don't want to be homeless for the holidays."
Paperwork shows she defaulted on a $37,000 second mortgage in 2008 during the Great Recession.
Dixon said she worked with a bank to lower monthly payments on her primary mortgage to keep her house.
She believed that second mortgage was rolled into the deal.
Then she got a phone call last year.
"And I'm thinking it's fraud until I got hit with a lawsuit," Dixon said.
The lawsuit was filed by a real estate company that now owns Dixon's second mortgage. The suit asks a St. Lucie County judge to order a foreclosure on Dixon's home, claiming she owes more than $53,000 for the balance of that mortgage, plus interest and late fees.
Court papers show the real estate company bought that second mortgage from a bank in 2009.
"They sat on it for, what, 12 years," Dixon explained. "No letters. No postcards. Nothing. This is not fair."
Contact 5 looked at "zombie debt" collections around the country and found that lawyers who file for collection agencies claim they're just going after debt that is legitimately and legally owed.
"It's legal," bankruptcy attorney Mitchell Nowack said, because of a 2016 Florida Supreme Court ruling on foreclosures. "The statute of limitations on foreclosure does not end until five years after the last payment comes due under the terms of the mortgage."
According to court papers, Dixon's last payment on her second mortgage was due Sept. 20, 2016.
The mortgage owner sued to foreclose on her property Sept. 15, 2021, five days before the five-year deadline.
"And I'm held over a barrel," Dixon lamented. "Because if I don't do it, they can take my house."
She's not alone.
Contact 5 found 20 cases in area courts where collection agencies are in the process of attempting to collect on defaulted zombie loans that are at least a decade old.
Nowack said he gets weekly calls from homeowners in the same situation.
"It's happening now because of all of the equity in everyone's home," Nowack said, adding that real estate prices are much higher than when homeowners defaulted on second mortgages more than a decade ago.
Dixon's home is now valued by the real estate website Zillow at $360,000. Just after she defaulted on her second mortgage, Zillow notes it was listed at just $79,000.
Contact 5 wanted to know why the real estate company that owns Dixon's second mortgage waited more than a decade to try to collect the debt and why it never notified her.
Our emails and phone calls to the company and its attorney were not returned.
"How can this happen?" Dixon asked. "It's just, it's mind-boggling."
This fall Dixon paid $25,000 towards her debt, hoping it can lead to a settlement.
"That's my whole life savings that I worked my whole life for, and my parents," Dixon said, adding that she has very little left in the bank. "That's it. That's it."
After Contact 5 asked for comments, the lawyer representing the loans owner asked the court to cancel a trial scheduled in December to "allow additional time to for the loan modification be finalized."
Nowack said if a homeowner is contacted about a zombie debt from a second mortgage, call a lawyer as soon as possible to be in the best possible negotiating position. Nowack said most bankruptcy attorneys offer an initial consultation for free.