Mississippi has one of the lower foreclosure rates in the nation, with a ranking of forty, but homeowners must find a way to stop foreclosure before it occurs, as there is no recourse once the process is complete.
As a title theory state, a Mississippi mortgage deed is held in trust until the mortgage is paid in full. However, the state does allow non-judicial foreclosures when there is a power of sale clause in the mortgage documents. That means the lender may foreclose without taking the homeowner to court.
The process generally takes sixty to ninety days, during which time the borrower may cure the default by making up all missed payments and accrued fees before the date of sale. Once the foreclosure is final, however, there is no right to redeem.
Help from Lenders
The first person a struggling homeowner should call on to obtain help stopping foreclosure is their lender. Yes, with the recent rash of foreclosures, many are overwhelmed and anxious to help reliable borrowers get back on track. The sooner a homeowner calls the lender’s loss mitigation department the better, in hopes of taking advantage of one of the following plans:
- If the borrower knows they are coming into some additional money that will help them catch up, the lender may wait a short time for that lump sum payment and reinstate the loan at that time.
- If the borrower has been otherwise diligent in making mortgage payments but is struggling because of new and difficult circumstances, the lender may be willing to modify the loan terms, rates, or schedules to aid the borrower.
- If the borrower convinces the lender that they are merely going through a temporary financial crisis, the lender may show forbearance and allow some late, partial, or missing payments to be made up at a specific date later in the loan schedule.
Help from Government Sources
In addition, borrowers may be able to qualify for local, state, or federal government programs to assist homeowners in stopping foreclosure. The best sources of information about such programs are an experienced foreclosure attorney and a counselor from the U.S. Department of Housing and Urban Development (HUD). Some of the most helpful sources of federal assistance include:
- The Mortgage Forgiveness Debt Relief Act of 2007 which no longer allows the IRS to levy income taxes on forgiven debt amounts.
- Two programs receive government incentives to refinance or adjust the terms of loans that are in, or are approaching, default. These programs are called the Homeowner Affordability and Stability Act and the Hope for Homeowners Act. They also are encouraged by government incentives to lower the principal amounts of qualifying mortgages and waive late charges or early repayment penalties.
Help from Bankruptcy Programs
A final means of avoiding foreclosure can come in the form of a bankruptcy petition. While it has become more difficult to qualify for these programs, and they do damage a debtor’s credit rating for a number of years, they may be able to help a borrower save their home.
- The process always begins with a court-ordered hold on collection and foreclosure actions. While individual lenders may petition the court to lift the hold, it often takes some time for such a petition to be granted, allowing the borrower time to prepare for the next step.
- Many debtors may have difficulty qualifying for Chapter 7 bankruptcy, but if they do, they will often have most or all of their consumer debt discharged, or erased. They may, however, have to liquidate some of their personal property. The homestead exemption in Mississippi is $75,000, however, which protects many homes from liquidation.
- More filers will qualify for Chapter 13 bankruptcy, which assigns a bankruptcy trustee to help the debtor and their lawyer reorganize their debts and formulate a plan to pay back their bills, but with smaller monthly payments. If the filer can complete the plan as ordered, they may be able to clear their debts and save their home.
Help through Home Sale
The final option for stopping foreclosure is for the borrower to sell their home themselves before the bank does so. In a troubled housing market, the homeowner may be unable to receive an offer equal to their asking price. If not, there are two additional options:
- The borrower may find a buyer willing to pay close to the asking price. The homeowner and their attorney should then negotiate with their lender in hopes that they would agree to accept this lower sale price to satisfy their mortgage balance. This is called a short sale, and in some cases, a good legal negotiator may even convince the lender to allow the homeowner to realize some income from the sale. It is important that this agreement is in writing, however, to prevent the lender from seeking a deficiency judgment for the difference between the sale price and the mortgage balance.
- Some lenders may be convinced to accept the home to satisfy the mortgage debt. This is called a deed in lieu of foreclosure and, again, if the homeowner’s lawyer is a good negotiator, may prevent a negative credit report.
Getting Legal Help Stopping Foreclosure in Mississippi
Finding an experienced and dedicated foreclosure attorney is vital, since they will not only advise a homeowner throughout the process, but they will represent them in any of the important negotiations that are required and steer them away from any deceptive debt management companies. Most lawyers will offer a free consultation to allow potential clients to compare several and find the best attorney for their needs.
