A New York zombie mortgage settlement will bring more than $242,000 in relief to borrowers. The debt buyers also must pay $240,000 in state penalties. Attorney General Letitia James announced the deal on Oct. 23, 2026.

The total of more than $480,000 includes those penalties. It is not all money for borrowers. The companies also must drop demands for expired payments in open foreclosure cases, according to the attorney general’s announcement.

How old second mortgages came back

The investigation covered BCMB1 Trust, First Age, LLC, NS194, LLC, Second Start, LLC, Southern MBA Trust and affiliates. The attorney general’s office said they bought more than 3,000 overdue New York mortgages starting in 2019. They filed more than 140 foreclosure cases.

Many loans were second mortgages from before the 2008 financial crisis. Some owners kept paying their first mortgage under a new payment plan. Yet they received no bills for the second. Years later, debt buyers sought payments from as far back as 12 years, the office said.

Who gets money or a loan credit?

The settlement agreement took effect Oct. 22. It sets two paths for borrowers on its loan lists:

• Loan credits: Some borrowers settled court cases by changing their loans. They will get loan credits for expired payments collected.
• Mailed checks: Some borrowers paid expired debt to settle court cases. They will get refunds.

The companies neither admit nor deny the state’s findings. They must report that refunds and credits are complete three months after the deal took effect. That deadline is for the companies, not for homeowners to apply.

The public records list no open claims form or filing deadline for borrowers. The deal refers to loan lists in separate exhibits. Those lists are missing from the posted PDF. That file alone cannot show if your loan qualifies.

What the deal does not erase

The deal covers payments too old to collect through legal action. That includes both principal and interest. Its six-year limit allows for times when the legal clock paused. It does not wipe out every loan or end every foreclosure. Get advice about your own loan and court dates.

Where homeowners can get help now

If a demand looks wrong, use the attorney general’s official complaint page or call 1-800-771-7755. A complaint lets you report a concern. It does not ensure you will get money from this deal.

Need help with a mortgage problem? The state’s homeowner guidance points to the Homeowner Protection Program, or HOPP. Call 1-855-466-3456 for free housing counseling and legal help. Homeowners in Utica and the Mohawk Valley can use this statewide service, too.

The attorney general urges people facing foreclosure to get legal help right away. Beware of anyone who charges a fee to speed up relief. Do not share bank details or a Social Security number with a stranger who calls to offer mortgage help.

Keep the paperwork and watch court dates

A New York court notice for second-mortgage borrowers says you may have legal grounds to lower what you owe. It urges borrowers to get legal help right away. Attend a settlement conference if the court schedules one.

For that meeting, gather your original loan papers, if you have them. Bring recent bills for both mortgages, letters from the company and proof of income. Note when you last paid and when the last bill came. These records can help a lawyer check the demand and the dates behind it.