Zombie Loans and Other Threats to Homeowners of Color

Kevin A. Thompson
November 2, 2023

Photo: Bungalow style home, San Jose,California

Tricksters are out there trying to take your home, and there are people who want to warn you about the methods they use to do it. 

California's Ethnic Media Services, partnering with HERA, (Housing and Economic Rights Advocates) held a news conference on November 2, 2023, Dia de los Muertos,  to present some facts and resources about this problem.  

HERA Senior Attorney Joe Jaramillo listed three main challenges to California homeowners of color and/or low income. The first is a family keeping a home after the parent or grandparent dies. If the deceased died without a will, the survivors will have to enter probate court to determine if they can keep possession of the home.  If unprepared financially and legally to fight in court, the family may lose the home and accumulated wealth it represents. Black and Latino homeowners are more likely to lose homes in this fashion.

The second threat is PACE (Property Assessed Clean Energy)  financing, or loans for solar panels or other energy-based home improvements.  Jaramillo stated that in these cases, the homeowner takes out a loan to install the new equipment. The home’s taxable value increases with the solar panels. He cited an Oakland family whose house tax assessment rose from  $6,000.00 to $13,000.00, which caused their mortgage payment to increase by $600.00 each month.

Unable to pay the increase, the house was foreclosed. 

The third threat is Zombie Mortgages. 

Jaramillo said that the Zombie Mortgage is a second loan attached to the main home loan, which, after several years, “rises from the dead” with a nine percent balloon payment. 

Mr. Saul de la Cruz, a homeowner in Salinas since 2007, described his ongoing bad experience with a zombie loan. Speaking through an interpreter, he described how his home’s second loan, from Countrywide, was sold to a new loan servicer who demanded $14,611.00 due immediately, in 2021. 

Mr. de la Cruz spoke from the office of Johanna Torres of  CRLA, Inc. (California Rural Legal Assistance). Ms. Torres said these types of predatory loans target the elderly and Spanish-speaking home owners, and often are hard to reach when the mortgage holder tries to make payment arrangements. 

Another presenter was Ms. Rebecca Franklin of California Mortgage Relief. Her program is funded by President Biden’s Housing Assistance Fund in March 2021. The program grants up to $80,000.00 per homeowner to tackle mortgage or tax arrears. She noted that the initial grant was for $1 billion to run through September 2025, though the money will likely run out before then. 

HERA attorney Mary Day appeared with Mr. Danny Bishop, who was mistakenly hit with $56,000.00 fine for code enforcement. Ms. Day helped Mr. Bishop fight against the City of Richmond, over the fines and  tax liens, totalling $90,000.00, at its highest point. Mr. Bishop, age 62, had inherited the home from his mother and grandmother, and has lived in the home since he was four years old. 

Ms. Day said the City of Richmond worked with HERA, admitted their mistake, and Mr. Bishop gets to remain in his home.

If you are a homeowner needing assistance, contact the panelists above at:

Joe Jaramilo jjaramillo@heraca.org

Rebecca Franklin   rebecca.franklyn@camortgagerelief.org

Johanna Torres   jtorres@crla.org

Mary Day   mday@heraca.org