The threat of losing your home can be overwhelming, and sometimes that makes it hard to think clearly and strategically. Many Mississippi homeowners are currently facing that stress. According to ATTOMData, foreclosures have fallen nationwide–from more than 1.6 million in the first half of 2010 to fewer than 300,000 in the first half of 2019. But, closer to home, the news isn’t so good. In the first half of 2019, there were 56% more foreclosure starts in Mississippi than in the same period during the previous year. And, as of October 2019, Hinds County had the third-highest foreclosure rate in Mississippi and Forrest County rounded out the top five.
Mississippi residents also face another challenge when they fall behind on mortgage debt. According to the same report cited above, the state has the shortest average foreclosure timeline in the country, at just over six months. If you’re facing foreclosure in Mississippi, it’s important to have a solid understanding of your options, and of the risks and benefits associated with each.
The Mississippi Foreclosure Process
Mississippi foreclosure law offers very little protection for homeowners. Unlike many other states, Mississippi does not require the lender to provide the borrower direct notice of the intent to foreclose. Rather, Mississippi law requires publication and posting at the courthouse in the county where the real estate is located.
At any time before the sale, the borrower may reinstate the loan by paying all sums that are past-due at that point, plus any attorney fees and costs of sale that have accrued. However, few homeowners who have fallen behind have the resources to make this lump-sum payment. Mississippi also does not provide a right of redemption for people who have lost their homes to foreclosure. The lack of right of redemption means simply that once the gavel falls at the foreclosure sale the property no longer belongs to you.
Mississippi mortgage borrowers do have some protection from other sources. For example, federal law requires that most residential mortgage loans be at least 120 days past due before foreclosure action starts. And, in most cases, the contract the borrower enters into with the lender requires that the lender provide written notice before accelerating the loan balance. Acceleration is required before foreclosure.
Mississippi allows for both judicial and non-judicial foreclosures, but most lenders won’t go to court before scheduling a foreclosure sale and selling the property. And, the process can move forward very quickly.
Another problem faced by many Mississippi residents who lose their homes to foreclosure is that the auction price is often too low to cover the outstanding balance on the loan. Sometimes, that happens because the mortgage is “underwater,” meaning that the homeowner owes more than the home is worth. As of the first quarter of 2019, well over 1,000 mortgage loans in Jackson, Mississippi were underwater. But, even when the fair market value of the home is equal to or slightly above the outstanding mortgage debt, the borrower can end up in the red. Homes typically sell below market value at foreclosure auctions, and the lender can also add costs of sale to the debt. That means that even after the lender forecloses and sells the home, the lender may bring a separate lawsuit to collect the remaining outstanding balance.
Fighting Foreclosure in Mississippi
Options for fighting foreclosure in Mississippi are limited, and often require quick action. When you first fall behind on your mortgage debt, you may be able to negotiate with the lender to catch up over time, lower your monthly payment and/or interest rate, or otherwise make it easier to bring your loan current. Once the lender accelerates the balance and starts the foreclosure process, it becomes much less likely that you’ll be able to work something out to keep your home. It is very important that after your loan is accelerated that you discuss your options with a lawyer to see if bankruptcy is right for you. Procrastination is your enemy when it comes to foreclosure especially if you want to try and remain in your home. Please do not be that person coming into our office the day after the foreclosure sale is held and be told sadly that there is nothing we can do to save your home. Be proactive not distracted.
If the lender has advertised for a public sale or your home has been sold at a foreclosure sale and there is still an outstanding balance, you may want to consider bankruptcy. Which type of bankruptcy might be right for your circumstances will depend in part on whether you are still trying to save your home or simply want to avoid owing the lender after the foreclosure proceeding.
The Automatic Stay and Foreclosure
In most bankruptcy cases–whether you file under Chapter 7 or Chapter 13–an automatic stay is entered as soon as the bankruptcy case is filed. The automatic stay is a court order that says most creditors and debt collectors have to temporarily stop all collection action. That means no collection calls, letters, lawsuits, wage garnishments or other attempts to collect on debts, including foreclosure activity.
The automatic stay only provides temporary relief, though. What comes next depends on your specific circumstances.
If you’re hoping to save your home and have enough income to pay mortgage payments moving forward while slowly catching up on the past-due balance, Chapter 13 bankruptcy may offer a solution. In a Chapter 13 case, you can pay back delinquent balances across a three to five year repayment plan. You may even be able to reduce interest rates and fees to make repayment more manageable. But, you’ll have to make those payments on time while also keeping your current mortgage payments up to date as they come due.
If you can’t or don’t want to keep your home, a Chapter 7 bankruptcy can free you from responsibility for any deficiency balance. If your home hasn’t yet been sold, the usual process is to surrender your home in the Chapter 7 case and discharge any remaining balance. If the property has already been sold, any remaining balance can typically be discharged just like any other unsecured debt.
To learn more about how bankruptcy may be able to help you avoid foreclosure or clear your debt after a foreclosure, schedule a free consultation with an experienced bankruptcy attorney at Bond & Botes. Just call 877-581-3396 or fill out the contact form on this site to get started. Don’t delay–the Mississippi foreclosure process moves quickly, and you may lose opportunities with the passage of time.
Merideth Drummond is an Associate Attorney working in the Bond & Botes Law Offices throughout Mississippi. She holds a Bachelor of Arts from Smith College, and a Juris Doctorate from the Mississippi College School of Law. She has been continuously engaged in the practice of bankruptcy law since her admittance to the Mississippi Bar in 1998. Read her full bio here.