Katrina Networking

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Sunday, October 22, 2006

MS Disaster Foreclosure Law

Just received this from Lawyers for Civil Rights Under Law Disaster Survivors Legal Assistance Workshop Document.

If you would like a copy of the entire document (42 pages) please email me at KatrinaCoalition@aol.com
It's long, but worth the read if you're close to foreclosure!

Contact an attorney immediately. If your mortgage was entered into prior to October 4, 2005 and you were affected by Hurricane Katrina, you have an absolute right to stop this method of foreclosure, forcing your lender to proceed through the Chancery Court until October 4, 2007. However, you must assert your rights for them to be effective. The first step will be to seek a preliminary injunction from court, which will halt your lender’s actions of foreclosure.
What do I have to prove to receive a preliminary injunction to stop the foreclosure?
To receive an injunction temporarily prohibiting foreclosure due to missed payments, the mortgagor must first complete an affidavit, swearing that their property meets the requirements for relief.
This statement must confirm the following:
Neither you nor any other person owning an interest in the legal title to the mortgaged property is able to pay the sums in arrears on the mortgaged debt.
Neither you nor any other person owning an interest in the legal title to the mortgaged property has been able to secure a refinancing of the mortgaged debt “after diligent effort” up to the date of the filling of the petition.
BE ADVISED! You will be required to provide correspondence between you and your lender to prove that you have tried to refinance your mortgage debt. It is important to keep all records between you and your bank, and document your efforts.
The destruction or damage on the mortgaged premises from the natural disaster has caused the value of the mortgaged property to depreciate by more than 15% of its value, or reduced the rental value by more than 15%.
To prove that your property value has diminished by this amount, have a reputable licensed appraiser inspect your property and document the change in value. Though the opinion of a licensed appraiser will be most persuasive in court, they can be expensive, costing over 100 dollars per hour.
More affordable opinions could be received from real estate agents a city tax appraisal officer, or a city building inspector. Presently, the City of Gulfport’s building inspectors are issuing opinions regarding the percentage of damage at no cost. If purchased recently, the purchase price may be used as a base point.
Please explore these options, keeping in mind that the burden is on you, the mortgagor, to prove that the fair market value of the property has depreciated by more than 15%.
If these requirements are met, the Chancellor of the Chancery Court will likely issue a preliminary injunction enjoining foreclosure proceedings on the mortgaged property. A sample affidavit can be found at the end of this document.
WARNING - everything stated in this affidavit must be entirely true! An inaccurate claim in this form constitutes perjury.

*** It is important to remember that this Statute is only a two-year moratorium from the date of the disaster or emergency declaration invoking it!
In this case, it was invoked on October 4th, 2005. Additionally, the payments relieved during the moratorium period will eventually have to be paid. The schedule of repayment will be set forth by your lender.

Am I excused from any payments if I receive an injunction?
No. If an injunction is issued, the court may establish a reasonable monthly “carrying cost” to be paid by the property owner in order to maintain the property, and cover property taxes, insurance and interest on the mortgage. If a property owner fails to make these payments, the court may revoke the injunction and allow the lender to foreclose on the property.

If my lender challenges the preliminary injunction with a motion to dissolve, what can I do?
If the preliminary injunction is granted, your lender may file a Motion to Dissolve the injunction, which will be heard at a hearing 30 or more days after the filing of your complaint. At this hearing, you must prove that everything stated in your affidavit is true. You should bring all documentation that was gathered in creating the affidavit. At this hearing, you will have to convince the judge that your testament is more accurate than the lender’s.

Is every homeowner entitled to an injunction?
No. This relief is targeted at homeowners who are legitimately unable to repay or refinance their mortgages as well as those whose properties have lost substantial value as a result of the hurricane. Therefore, property owners must swear in their petition that: (1) they cannot pay the amounts past due on their mortgage; (2) that they have tried but have been unable to refinance their mortgage and (3) that their property has lost more than fifteen (15) percent of its value because of either structural damage or economic conditions caused by the hurricane. Nevertheless, lenders may still challenge such petitions, and homeowners may be required to submit evidence sufficient to prove that they qualify for an injunction.

I am a rental property owner. Are my rental properties protected as well?
In addition to the protections outlined above, rental property owners may receive an injunction if they can show the following: (1) that they cannot pay the amounts past due on the mortgage; (2) that they have tried, but have been unable to refinance the mortgage, and (3) that they have lost more than 15 percent of the average annual income derived from the property as a proximate result of the hurricane. For residential rental property owners, however, there is an additional requirement that “good faith” efforts be made to make a property habitable.

What will happen in when the moratorium ends in October 2007?
As a temporary measure, the Moratorium has a termination date. As such, after October 4, 2007, lenders will be able to once again initiate foreclosure proceedings (as they could before the hurricane) against property owners who are still delinquent on their mortgage payments, including payments that were originally scheduled to be made before and during the moratorium period.


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