On April 1, Sen. Elizabeth Warren (D-Mass.), ranking member of the Senate Banking, Housing, and Urban Affairs Committee, sent a letter to Consumer Financial Protection Bureau (CFPB) acting Director Russell Vought, expressing concerns that banks are attempting to foreclose on families based on second mortgages that many homeowners believed were canceled, known as “zombie mortgages.”

In 2012, the mortgage servicers Bank of America Corp., JPMorgan Chase, Wells Fargo, Citigroup Inc. and Ally Financial reached the $25 billion National Mortgage Settlement. As part of the settlement, the servicers provided over $15 billion of relief to consumers with second mortgages, and those second mortgages were extinguished.

According to the letter, recent reporting has indicated that some of the second mortgages may not have been extinguished, as homeowners who had stopped receiving statements on their second mortgages and received tax documents saying they were canceled reported that they learned the second mortgage was still active. In many cases, the homeowners were facing foreclosure.

To understand which second mortgages the banks received credit for extinguishing, Warren wrote to the settlement’s independent monitor and requested any data about the extinguished second mortgages. The monitor did not have the requested records but noted that the CFPB “has primary jurisdiction under the mortgage servicing provisions of Dodd-Frank and the Truth in Lending and the Fair Debt Collection Practices Acts.”

According to Warren, the monitor also said they were “deeply troubled” by conditions at the CFPB.

“A properly functioning CFPB is crucial to protecting people from predatory practices, including promising to cancel mortgages and then using those mortgages to foreclose on homes many years later, as is being reported,” Warren quoted the monitor as saying. “As a former regulator with a long history of working to ensure fair treatment of financial services consumers, I am deeply troubled by the current state of that agency, including its apparent unwillingness to hold financial services providers accountable when they violate the law.”

Recent reporting also indicated that the CFPB had been preparing cases against parties involved in zombie mortgages, including one enforcement action, to be brought in the first quarter of 2025.

The letter stated that while the White House said it was “completely false to claim work on these cases has been ‘abandoned,’” the CFPB has not brought any public cases on this matter under its present leadership.

Warren noted that the CFPB under the present leadership has demonstrated dereliction of its duty to protect consumers.

Warren requested that the CFPB provide any data it has about the second mortgages extinguished under the settlement no later than April 13.

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