Karen McDonough of Quincy, Mass., was enjoying her tea one morning in the dining room when she saw something odd outside her window: a group of people gathering on her lawn. A man with a clipboard told her that her home no longer belonged to her. It didn't matter that she'd been paying her mortgage for 17 years and was current on it. She was a nurse with a good job and had raised her kids there. But this was a foreclosure sale, and she was going to lose her house. McDonough had fallen victim to what's called a zombie second mortgage. Homeowners think these loans are long dead. But then the loans come back to life because they get bought up, sometimes for pennies on the dollar, by debt collectors that then move to collect and foreclose on people's homes. On today's episode: An NPR investigation reveals the practice to be widespread. Also, what are zombie mortgages? Is all this legal? And is there any way for homeowners to fight the zombies? You can read more about zombie second mortgages online at: npr.org/zombie Correction: An earlier version of this episode description misspelled Karen McDonough's last name as MacDonough. Help support Planet Money and get bonus episodes by subscribing to Planet Money+ in Apple Podcasts or at plus.npr.org/planetmoney. Learn more about sponsor message choices: podcastchoices.com/adchoices NPR Privacy Policy
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One spring morning a couple of years ago, Karen McDonough was having her tea at her dining room table.
She lives in a cute little two bedroom place in Quincy, Massachusetts.
She looks out her window to the neighborhood beyond, and she sees something unusual.
There were like 20 cars, and they all came at the same time.
And they parked, like, in front of my house, across the street, up the street and down the street.
I just had this feeling like something really bad had happened to she was right.
Something bad was definitely happening to her.
And then I saw people get out, and then they were like, coming to my lawn, and I'm like, why is everybody at my house?
Karen puts on her shoes, goes out to the driveway.
At this point, a group of men are milling around the lawn, casually dressed, except for one guy who seems to be in charge.
There was somebody, I think he might have had a uniform on or something, and he had a piece of paper.
And I said, what's happening?
And he goes, we're selling your house.
And I'm like, what are you talking about?