Does Mississippi allow for deficiency judgments?

Those who are facing foreclosure in Mississippi need to know the answer to the question, is Mississippi a deficiency state? The answer, unfortunately, is yes. This means homeowners need to understand what a deficiency judgment is and how they can take steps to protect themselves from a deficiency judgment. 

What is a Deficiency Judgment?

A deficiency judgment allows a mortgage lender to collect the deficit balance remaining on a mortgage after the collateral is sold:

• Mortgages are secured loans, which explains in part why the interest rate on most mortgages is lower than the interest rate on unsecured debt, like credit cards
• The home is the "security" or collateral
• If you stop paying, the bank can take the collateral- the home- and sell it
• Sometimes the sale of the home doesn't create enough money to pay off the loan in full. Assume, for example, property values fell after you borrowed and bought a $500,000 home. If your $500,000 home is now worth only $250,000, the bank is not going to be able to recoup the entire $500,000 they lent you by selling the house. 
• If there is a balance remaining after the sale of the home- aka money the bank can't recoup- then a deficiency judgment allows them to sue you so that you will have to pay this balance. 

If the lender receives a deficiency judgment against you, the balance you cannot pay off in cash may be taken out of your paychecks if the court garnishes your wages, or the court may also place a lien on any property you own at the time of the judgment.  

To protect yourself from a deficiency judgment, it is a good idea to explore other options with the bank, such as a short sale or a deed in lieu of foreclosure. You should also strongly consider consulting with a lawyer to find out what your options are in Mississippi, since you do not want to find yourself making thousands of dollars of payments for a home you do not even own any more.