Sen. Berthel Applauds Senate Passage of Bill Protecting Against ‘Zombie Mortgage’ Predatory Lending

HARTFORD – State Sen. Eric Berthel (R-Watertown), Banking Committee ranking member, today applauded the Senate’s bipartisan approval of SB 1336, which includes a provision to shield homeowners from decades-old “zombie” mortgage debts that are dormant or unpaid.

“Property values have surged in recent years, and now these so-called ‘zombie mortgages,’ which were not worth the effort to collect at the time, are being pursued. This bill protects homeowners from collections by predatory lenders or collection agencies now seeking a payoff, and it was met with strong support from realtors, bankers, and credit unions.

“It codifies a statute of limitations to eliminate any ambiguity and clears land records for smoother transactions going forward. This policy aligns Connecticut with national trends and best practices, and is the right thing to do,” said Sen. Berthel.

 Background

• SB 1336 reforms Connecticut’s foreclosure statute of limitations and makes changes to the mortgage discharge by possession process. It establishes a 10-year deadline to bring foreclosure actions and provides a more efficient mechanism for homeowners to clear outdated mortgage liens from land records.
• As property values continue to see dramatic increases, there has been a preponderance of mortgage lenders and debt collectors that are initiating foreclosure threats from decades-old mortgage debts.
• This bill reduces legal uncertainty for homeowners by providing a definitive outer limit to enforce mortgage rights and reduces long-term litigation risk.