Jackson Jambalaya

Is Jackson Mayor Frank Melton about to lose his home? A five-year balloon note on Frank Melton's home at 2 Carter Grove Circle held by Bancorpsouth was due in full on December 5, 2008 (The lack of a release of the mortgage by Bancorpsouth was verified at the close of business Friday by the Hinds County Chancery Clerk's office.)

The mortgage was taken out by Mr. Melton and his wife on November 24, 2003 for $250,000. The Meltons were to pay in monthly installments of $2,045.03 until December 5, 2008, when the "final balance of principal and interest" was due (Link to copy of deed of trust at bottom of post)

Using a mortgage calculator on Bankrate.com, it is estimated the Mayor's mortgage was a 15/5 balloon (payments amortized at fifteen years with a final payment due in five years.). Using 15 years for the term and an interest rate of 5.5%, a payment of $2,043 was calculated. Without knowing any terms of the mortgage, this probably the most likely scenario for the terms of his note as longer terms would mean a much higher interest rate. Bankrate.com Mortgage Calculator . If these are the correct terms, then the amount (excluding any additional fees) due in full last Friday was $189,397.13 according to an Amortization Table.

It is also interesting that Melton took out a five-year balloon note on his home when in late 2003, there was a refinance boom in the mortgage industry as rates were at historical lows. The Mayor should have been able to get a fifteen year note (with no balloon due) at the same interest rate or close to it as his current mortgage.

This is not the first time questions have been raised about Frank Melton and his mortgage payments as earlier in the year his Jackson home was placed into foreclosure proceedings by Omnibank (as discussed in two earlier posts, Mayor and His Mortgages and Frank's Foreclosure Problem). The Mayor also had a property in Texas that was seized and sold in a Sheriff's sale in 2006 ( Another Foreclosure ). Mr. Melton was forced to pay taxes and late fees on his Jackson home the day before it was subject to a county tax sale as well a few months ago. Mr. Melton is also currently delinquent on the taxes for his home in Tyler, Texas, owing (including late fees of $890.17) $5,474.50. Smith County, Texas Property Tax Records

Regardless of how much Mr. Melton owes for his second mortgage or property taxes in Texas, what is clear is that the first mortgage on his current home in Jackson became due last Friday and is to be paid in full. Since this is a balloon note, it has to either be paid in full by Mr. Melton or Bancorpsouth or another lender can refinance the property.

It also must be asked why a bank would refinance a huge mortgage to someone who has lost a home to foreclosure in the last two years and has received a foreclosure notice on the current home in the last 11 months. Lending standards now require a borrower to not have a foreclosure on their credit history for 5 years as foreclosures are now considered to be worse than a bankruptcy when underwriting a mortgage. Given today's climate and how banks are reeling from losses caused by defaulting borrowers, a shareholder or member of the board will likely have some tough questions for anyone who refinances Melton's mortgage given his recent foreclosure and property tax problems (especially considering there is a SECOND mortgage due in full in April and the fact that the Mayor faces a trial in January.)

Of course, Mr. Melton could have paid his balloon note in full and the release of the mortgage may simply not be filed at the courthouse yet by Bancorpsouth. Does anyone think that is the likely explanation?

Copy of Melton's Deed of Trust

Update: WLBT covered this tonight. WLBT Story