Foreclosure professionals are wise to implement procedures that determine whether a homeowner or tenant qualifies for special federal protection of military personnel before initiating a foreclosure process or proceeding, or before initiating an eviction. There are specific rules that delineate these protections, as well as the requirements of military service that qualify. The professionals at Adams & Edens are familiar with these special federal rules and we can assist you with avoiding liability exposure for taking adverse action impacting our men and women in uniform.
WARNING – Check Those Taxes!
Under circumstances where a Mississippi property that is encumbered by a mortgage or Deed of Trust has been sold for non-payment of taxes, the lien can be extinguished if the property is not redeemed within two (2) years of the date of the tax sale. One does not have to look far to become inundated with sales pitches regarding wealth and fortune associated with acquiring properties through tax sales and deeds. In recent years, internet blogs and television infomercials have exploded on the scene thereby giving rise to an increase in general awareness of properties being sold for taxes and also to increased competition among tax sale buyers.
From a foreclosure perspective, tax sales and deeds are definitely a problematic “thorn in the side”. Foreclosure attorneys must exercise extreme diligence to ensure that tax sale purchasers do not ultimately reap a windfall benefit a the expense of a lender / servicer client.
The following is a brief summary of Mississippi law and procedures pertaining to the sale of properties for non-payment of property taxes:
Ad valorem taxes (i.e., property taxes) for a particular property are assessed as of January 1 of a particular year. These taxes are due and payable on or before February 1 of the following year. By statute, the assessment constitutes a lien on the real property and in order to enforce the lien, the County Tax Collector has the right to sell the property for unpaid taxes. In connection with the sale, no actual notice is given, but notice of the sale is published in the newspaper of general circulation within the County.
Mississippi Code Ann. § 27-41-55 (1972), as amended, authorizes the sale of properties for unpaid taxes on the last Monday in August, or at the option of the Chancery Clerk, the sales may be held on the first Monday of April of each year. Under Mississippi law, any person with an ownership interest in the property or holding a lien interest on the property has the absolute right to redeem the property from the particular tax sale by remitting to the Tax Collector or the Chancery Clerk the amount of the taxes, plus penalty (5% of the taxed amount) and interest (1% of the taxed amount per month from and after the month of sale) and expenses incurred in connection with the sale itself. Mississippi Law provides for a 2-year redemption period, from and after the date of sale. In the event the 2-year redemption period expires without payment of the referenced amounts, the tax sale purchaser is entitled to receive a tax deed from the Chancery Clerk. See Mississippi Code Ann. § 27-45-1 (1972), as amended, et seq. This tax deed effectively wipes out the lender’s lien interest in the property.
Mississippi Code Ann. § 27-43-1 (1972), as amended, et seq, provides an affirmative requirement for the Chancery Clerk to provide the record owner(s) and any lien holder(s) with actual written notice of the impending expiration of the redemption period. The Clerk has a duty to search the land records and to provide notice to any lien-holder of record. The Clerk’s obligation is limited to providing notice to the current holder of record; consequently, this brings into play the importance of the proper and timely filing of Assignments on acquired loans.
For the most part, lenders and servicers prefer not pay delinquent taxes on loans that are in foreclosure. The thought process being that should the property sell to a third party at the foreclosure sale, the property will be conveyed subject to the outstanding taxes and the costs of redeeming the property from the delinquent taxes can be passed on to the third party purchaser. This practice is somewhat risky and gives rise to potential disaster if the property has been sold for taxes, but is not redeemed prior to the running of the statute of the two (2) year redemption period.
This topic is foremost in my mind as the two (2) year redemption period on the 2006 taxes runs today. For “August sale” counties, properties with delinquent taxes were sold for the taxes on Agust 27, 2007. Unless redeemed by 5:00 p.m. today, the tax sale purchaser will be entitled to a tax deed, which upon confirmation, will completely extinguish an outstanding mortgage or Deed of Trust. Adams & Edens personnel have spent countless hours over the past several weeks reviewing all open foreclosure files and visiting with the Chancery Clerks’ offices in the counties where the properties are located to confirm that no client is in danger of losing a lien to a tax deed. The investment in time is substantial, but the danger associated with a client losing its lien while the loan file is “on our watch” makes the process a “necessary evil”.
The following Counties hold sales and have maturity dates in April:
Attala Noxubee
Amite Quitman
Bolivar Sunflower
Coahoma Washington
Lowndes Wilkinson
Montgomery Yalobusha
The following Counties hold sales and have maturity dates in August:
Adams Greene Lauderdale Pontotoc Wayne
Alcorn Grenada Lawrence Prentiss Webster
Attala Hancock Leake Rankin Wilkinson
Benton Harrison Lee Scott Yazoo
Calhoun Hinds Leflore Sharkey
Carroll Holmes Lincoln Simpson
Chickasaw Humphreys Madison Smith
Choctaw Issaquena Marion Stone
Claiborne Itawamba Marshall Tallahatchie
Clarke Jackson Monroe Tate
Clay Jasper Neshoba Tippah
Copiah Jefferson Newton Tishomingo
Covington Jefferson Davis Oktibbeha Tunica
DeSoto Jones Panola Union
Forrest Kemper Pearl River Walthall
Franklin Lafayette Perry Warren
George Lamar Pike Washington
Foreclosure Sale of Incorrect Property
With the sky-rocketing increase in foreclosures across the United States, mistakes are inevitable. Lenders, servicers and attorney firms must be vigilant to ensure that costly mistakes are held to a minimum. A startling example of such a mistake involves a situation where a Florida woman’s home was incorrectly foreclosed, sold to a third party, the local sheriff’s office removed the woman, her family and all her possessions before she was able to obtain a court order over-tuning the foreclosure sale.
It seems inconceivable, especially in a judicial foreclosure state such as Florida, that a mortgagee and its foreclosure firm could complete a foreclosure and actually cause the homeowner to be physically removed from a property other than the property pledged by the mortgagor and covered by the mortgagee’s mortgage or Deed of Trust, without someone discovering the error.
Adams & Edens and other foreclosure firms have procedures and checks and balances in place to ensure that the property intended as collateral for a loan is the property described in the mortgage or Deed of trust and is the property actually foreclosed upon. Thorough loan document review and pre-foreclosure title review and examination are key to discovering “mix-ups” with property ownership / identities.
PFTA Compliance in Connection with Post Foreclosure Eviction Actions
On May 20, 2009, President Obama signed Senate Bill 896 into law [now Public Law No. 111-22]. Of particular interest to foreclosing lenders and servicers and attorney firms representing these entities is Title VII of the Act, known as the Protecting Tenants at Foreclosure Act of 2009 ["PTFA"]. The Act, establishes a ninety (90) day notice to vacate period and grants additional rights to tenants in foreclosed properties. While the Act is extremely broad and vague and has given rise to more questions than answers, it is abundantly clear that the rights of persons or entities purchasing tenant occupied properties purchased through foreclosure after May 20, 2009, will be significantly impacted.
In short, the central purpose of Title VII of the Act is to provide innocent tenants, whose landlords have lost properties to foreclosure, with additional time within which to secure alternative housing arrangements. A thorough statement as to the purpose, import and impact of the Act can be found in a recent Federal Register Notice from the Department of Housing and Urban Development (”HUD”) and in a summary of Senate Bill 896. [Source www.thomas.gov]
Purchasers of foreclosed properties must be aware of the ninety (90) notice requirement and additional rights extended to tenants under the act, including but not limited to the right of certain tenants to continue leasing the property from the new owner(s), and must implement sufficient processes to ensure compliance with the Act. Over the course of the past weeks and months since the enactment of this law foreclosing lenders and servicers and attorney firms have implemented varying practices and procedures for ensuring compliance. Due to the “unknowns” associated with the Act, the process is continually evolving.
Welcome to our Lender’s Rights Blog
Brad Jones is writing the Lender’s Rights Blog. Brad leads the firm’s Lender Services Group and has vast experience in the field of creditor representation, and will be expounding on the dynamic area of foreclosure law.