CFPB Opinion on Zombie Mortgages and Time-Barred Debt, Now Withdrawn

Citation

88 Fed. Reg. 26475 (May 1, 2023), withdrawn, 90 Fed. Reg. 20084 (May 12, 2025)

Court or agency

Consumer Financial Protection Bureau

Date

May 1, 2023

Law

FDCPA, Regulation F, Texas law

Summary

In an advisory opinion published May 1, 2023, the CFPB took aim at 'zombie' second mortgages that resurface years after borrowers stopped hearing from the lender. It said collectors who sue or threaten foreclosure on time-barred mortgage debt may violate the FDCPA. The CFPB withdrew the opinion in May 2025, but the regulation itself was not changed.

Background

Many homeowners took out second mortgages or home-equity loans before the 2008 housing crash. Some stopped receiving statements for years, assumed the loan had been forgiven or written off, and were later contacted by a debt buyer demanding a large balance and threatening foreclosure. These are often called “zombie” second mortgages.

Regulation F, effective November 30, 2021, already said a debt collector “must not bring or threaten to bring a legal action against a consumer to collect a time-barred debt” (12 C.F.R. 1006.26(b)).

What changed

The CFPB’s advisory opinion, effective May 1, 2023, applied that rule to mortgages. It said the FDCPA and Regulation F prohibit FDCPA debt collectors from suing or threatening to sue on time-barred debt. As a result, a collector that brings or threatens a state-court foreclosure to collect a time-barred mortgage debt may violate the law.

On May 12, 2025, the CFPB withdrew this advisory opinion as part of a withdrawal of 67 guidance documents. The withdrawal notice said the Bureau would not enforce or rely on that guidance while its review continues. The withdrawal did not amend section 1006.26(b), which remains part of Regulation F.

Our take

The core protection survives. A covered debt collector still may not sue or threaten suit on a time-barred debt. What was withdrawn is the CFPB’s explanation of how that rule applies to foreclosure and its signal that it would enforce it in the mortgage context.

Whether a mortgage debt is time-barred depends on state law and the loan’s history, including whether and when the debt was accelerated. These cases are fact-specific.

What it means if you’re sued in Texas

Texas has its own limitations rules for real-property liens. Under Civil Practice and Remedies Code § 16.035, a suit to foreclose a real-property lien generally must be brought within four years after the cause of action accrues, and the lien becomes void when that period runs. When the cause of action accrues, especially after acceleration or abandonment of acceleration, has been heavily litigated in Texas.

Texas Finance Code § 392.307 also bars debt buyers from suing on consumer debts after the limitations period. If you receive a demand or foreclosure notice on an old second lien, get the payment history and any acceleration notices before you pay or sign anything.

If an old mortgage or home-equity debt has resurfaced, a free case review is available.

Takeaway

If an old second mortgage or home-equity loan comes back to life, check the limitations dates before paying or responding. A partial payment can have consequences under some laws.

Sources

Primary authority

• Advisory opinion: Time-Barred Debt (Federal Register, 88 Fed. Reg. 26475)
• Withdrawal notice (Federal Register, 90 Fed. Reg. 20084)
• 12 C.F.R. 1006.26 (eCFR)

Secondary sources

• CFPB Withdraws Guidance Documents: A Shift Toward Regulatory Restraint (Venable)

This summary and analysis are general information, not legal advice. Later decisions, amendments or agency actions may change the law; check the current status before relying on it.