Understanding the foreclosure process in Mississippi is an important part of navigating your own home foreclosure process.
Before we dive in…
Understanding the Foreclosure Process in Mississippi
What is foreclosure anyway?
Foreclosure is the legal process that lenders use to take back property securing a loan, generally after the borrower stops making payments.
Foreclosure is no fun, but just know that it’s not the end of the world.
When you know how foreclosure in Mississippi works… it arms you with the knowledge to make sure you navigate it well and come out the other end as well as possible.
A Few Ways To Stop Foreclosure In Mississippi
Bring your payments current. Communicate with your lender before sending funds when you are behind on your payments. They may offer several options to do this when you are behind on payments. Be sure to get any agreement with your lender “in writing” and keep that documentation.
Loan Forbearance happens when the lender agrees to allow you to stop making payment for a specific period of time. It is important to note, all of the payments may be due in full at the end of the forbearance period. Be sure to get any agreement with your lender “in writing” and keep that documentation.
Loan Modification is when the lender will add your past due payments to current loan balance or create a balloon payment at the end of the loan period. Be Aware this may extend your loan out for additional years, but an increase in the interest rate, if current rates are higher, could result in a higher loan payment and make an already challenging situation worse. Be sure to get any agreement with your lender “in writing” and keep that documentation.
Sell The Property with a real estate agent or to a real estate investor to payoff the mortgage and cancel the sale. If a sale date has been set, communication between you, your lender and the foreclosure attorney is very important. When you sell your property be sure if your balance is paid in full that the lender files the appropriate documentation with the county, and that it is reflected on your credit as paid. We can guide you through this process whether we buy your property or not.
The Basic Stages of A Foreclosure
There are a few stages that are important to any foreclosure process.
Foreclosure works differently in different states around the country.
The two ways different states use to foreclose upon a property are: judicial sale or power of sale. We are located in a power of sale state.
Connect with us by calling 601-401-6965 or through our contact page to have us walk you through the specific foreclosure process here locally in Central Mississippi.
In either scenario, foreclosure typically doesn’t go to court until 3-6 months of missed payments have elapsed. This timeline may vary greatly so Do Not Wait, Contact Us Today by phone or through our contact page above. Usually (but not always), a lender will send out many notices that you are in arrears – overdue or behind in your payment. Don’t ignore these notices! We know first hand this is difficult, but it is so important that you communicate with your lender.
Under Judicial Foreclosure:
- Your mortgage lender must file suit in the court system.
- You’ll get a letter from the court demanding payment.
- Assuming the loan is valid, you’ll have 30 days to bring payment to court to avoid foreclosure (and sometimes that can be extended).
- If you don’t pay during the payment period, a judgment will be entered and the lender can request the sale of your property – usually through an auction.
- Once the property is sold, the sheriff serves an eviction notice and forces you to immediately vacate the property.
Under Power of Sale (or Non-Judicial Foreclosure):
- The mortgage lender serves you with papers demanding payment, and the courts are not required – although the process may be subject to judicial review.
- After the established waiting period has elapsed, a deed of trust is drawn up and control of your property is transferred to a trustee. The trustee will publish a Notice of Sale as required by law and this notice is posted in several locations for public review.
- The trustee can then sell your property to the lender at a public auction (notice must be given). This auction is open to anyone to observe or bid on the property. The lender can only keep what they are owed and this may include costs incurred in the foreclosure process. If a successful bidder purchases the property as a higher price, you may have an opportunity to collect those additional funds, but that’s a topic for another day!
Anyone who has an interest in the property must be notified during either type of foreclosure.
For example, any contractors or banks with liens against a foreclosed property are entitled to collect from the proceedings of an auction. We have seen HOA liens, contractor liens, tax liens, etc and all are noticed about the pending foreclosure. Any of these may also have a representative bid at the auction. If there is a significant overbid at the auction, this overbid may resolve some of these other debts as well.
What Happens After A Foreclosure Auction?
After a foreclosure is complete, the loan amount is paid off with the sale proceeds.
Sometimes, if the sale of the property at auction isn’t enough to pay off the loan, a deficiency judgment can be issued against the borrower.
A deficiency judgment is where the bank gets a judgment against you, the borrower, for the remaining funds owed to the bank on the loan amount after the foreclosure sale.
Some states limit the amount owed in a deficiency judgment to the fair value of the property at the time of sale, while other states will allow the full loan amount to be assessed against the borrower.
Here’s a great resource that lists the state by state deficiency judgment laws, since every state is different.
Generally, it’s best to avoid a foreclosure auction. Instead, call up the bank, or work with a reputable real estate firm like us at IM, LLC to help you negotiate discounts off the amount owed to avoid having to carry out a foreclosure. Whether we recommend you work with our agent partner, we buy the property, or are able to guide you to a successful resolution with your lender, you are our first priority!
Experienced real estate agents and real estate investors can help you by negotiating directly with banks to lower the amount you owe in a sale. This could be considered a Short Sale and this may have tax implications – even if your home is worth less than you owe. It is important to explore these tax implications if you sell for less than you owe. Talk to an accountant before agreeing to this type of sale, and read all the documents before signing.
If you need to sell a property near Central Mississippi, we can help you.
We buy houses in Central Mississippi Mississippi like yours from people who need to sell fast.
Give us a call anytime 601-401-6965 or
fill out the form on this website today! >>
Another Foreclosure Resource For Central Mississippi Mississippi HomeOwners: