How ‘Zombie Mortgages’ Are Coming Back to Haunt Homeowners Years Later
Zombie mortgages are resurfacing years later. In this lesson, students examine how these debts reappear and what they reveal about housing policy and consumer protections.
Note: If you are short on time, watch the video and complete this See, Think, Wonder activity: What did you notice? What did the story make you think about? What would you want to learn more about?
They’re called “zombie mortgages” — debts that homeowners thought were forgiven long ago, only to learn that they still exist and could cost them their homes. Economics correspondent Paul Solman and producer Diane Lincoln Estes report on these back-from-the-dead debts, in partnership with the documentary news group Retro Report.
View the transcript of the story.
Key Terms
second mortgage — a loan taken out by the homeowner using their house as collateral (item of value) while they still have another loan secured by their house
lien — a right to keep possession of property belonging to another person until a debt owed by that person is discharged
retroactive interest — interest calculated on the full balance from the original purchase date, not just the portion that hasn't been paid, often at exorbitant rates
foreclosure — process that permits the bank to sell a person's home to pay back their debt if the homeowner defaults on their mortgage payments
Warm-Up Questions
- Who are the homeowners interviewed for the story, and what are their backgrounds?
- When was the last financial crisis that centered around subprime mortgages?
- What is a zombie mortgage?
- Why was the work of the Consumer Financial Protection Bureau, which required debt collectors to send periodic statements to homeowners, essentially shut down last February?
- How does retroactive interest affect struggling homeowners?
Essential Questions
- Do you think protections against zombie mortgages should exist for homeowners? Why or why not?
- Do you think protections against zombie mortgages should exist for homeowners? Why or why not?
- Media literacy: The News Hour report doesn't include the reasons why the homeowners interviewed took out a second mortgage. Do you think this is a relevant question? Why or why not?
What Students Can Do
Watch Retro Report's story below on the 2008 financial crisis and check out the accompanying lessons (you will have to login - it's free!): Lesson Plan: Accountability and the Great Recession: A Financial Crisis Inquiry and Lesson Plan: the 2008 Financial Crisis.
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Republished with permission from PBS News Hour Classroom.
PBS News Hour Classroom helps teachers and students identify the who, what, where and why-it-matters of the major national and international news stories. The site combines the best of News Hour's reliable, trustworthy news program with lesson plans developed specifically for... See More
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