Banking and Finance Law Daily Wrap Up, MORTGAGES—Warren questions CFPB on efforts to protect consumers as ‘zombie mortgages’ resurface, (Apr 2, 2026)

By A. Bryan Gerepka

Warren expressed concerns that banks are attempting to foreclose on second mortgages that many homeowners believed had been cancelled under the National Mortgage Settlement.

Senator Elizabeth Warren (D-Mass,) accused the Consumer Financial Protection Bureau of failing to adequately supervise the mortgage market and prevent Americans from losing their homes to foreclosures based on “zombie” mortgages—the second mortgages that were written off under the terms of the $25 billion National Mortgage Settlement (NMS) with the five largest servicers, Bank of America Corporation, JPMorgan Chase & Co., Wells Fargo & Company, Citigroup Inc., and Ally Financial Inc. The settlement addressed allegations of foreclosure and servicing abuses, and most of the funds were earmarked for borrowers’ relief, including over $15 billion to consumers with second mortgages, the Senator wrote in a March 31, 2026, letter to Russell Vought, Acting Director of the CFPB. “I am concerned that banks may have received credit for extinguishing mortgages under the terms of the [NMS] and then turned around and sold those same loans to debt collectors,” the letter said.

Warren noted that the CFPB appears to have abandoned efforts to protect “the thousands of Americans at risk of losing their homes due to zombie mortgages since January 21, 2025.” The Senator set an Apr. 13, 2026, deadline for the agency to respond to the following series of questions:

1. Any records related to the second mortgages that were extinguished under the terms of the NMS, including, for each: the lender name, loan number, borrower name, loan amount and amounts extinguished, date of extinguishment, and any other relevant identifying information for each loan.

2. A description of any active matters that the CFPB is pursuing related to zombie mortgages, including but not limited to: promulgating rules, issuing guidance, conducting examinations, investigating relevant parties, requesting information, preparing for enforcement actions, or bringing enforcement actions. For each active matter, describe the content of the action, the parties involved, the anticipated timeline of the action, and the anticipated outcome.

3. Whether the CFPB has identified any overlap between mortgages purportedly extinguished under the NMS and mortgages on which debt collectors are currently attempting to collect.

4. A description of any matters that the CFPB has paused, dropped, or cancelled related to zombie mortgages on or after January 21, 2025, including but not limited to: promulgating rules, issuing guidance, conducting examinations, investigating relevant parties, requesting information, preparing for enforcement actions, or bringing enforcement actions. For each matter paused, dropped, or cancelled, provide an explanation for the decision to pause, drop, or cancel the matter.

5. An explanation of why the CFPB does not appear to have taken or initiated any new enforcement or other public actions to address the thousands of Americans at risk of losing their homes due to zombie mortgages since Jan. 21, 2025.

Status of CFPB Investigations. The CFPB had previously used its jurisdiction to conduct important work on behalf of consumers, Warren wrote, noting that during the Biden Administration, the CFPB held hearings and published consumer information on zombie mortgages (see Banking and Finance Law Daily, Apr. 26, 2023). “Recent reporting indicates that the CFPB had been preparing cases against multiple parties involved in zombie mortgages, including one enforcement action it had been planning to bring as early as the first quarter of 2025,” she wrote. “While the White House stated that 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 your leadership,” she wrote. The CFPB’s decision under your leadership to abandon Americans losing their homes to zombie mortgages is just the latest example of the CFPB’s dereliction of its duty to protect consumers, she added.

Background. Warren’s letter is a follow-up to her Dec. 16, 2025, letter to Joseph A. Smith Jr., Independent Monitor, Office of Mortgage Settlement Oversight, requesting records of mortgages that were extinguished under the NMS (see Banking and Finance Law Daily, Dec. 18, 2026). According to Warren, the monitor did not have any of the records and, instead, referred her to the CFPB, which has primary jurisdiction under the mortgage servicing provisions of Dodd-Frank, the Truth in Lending, and the Fair Debt Collection Practices Acts. Further, the CFPB has supervisory authority over the five servicers subject to the Settlement.

Companies: Ally Financial Inc.; Bank of America Corporation; Citigroup Inc.; JPMorgan Chase & Co.; Wells Fargo & Company

LegislativeActivity: BankingOperations ConsumerCredit DebtCollection DoddFrankAct FairCreditReporting Loans Mortgages OversightInvestigations TruthInLending UDAAP