Understanding the foreclosure process in TN is an important part of being able to navigate your own home foreclosure.
Understanding the Foreclosure Process in TN
What is foreclosure?
Foreclosure is the legal process that lenders use to take back a property that is secured by a loan. This usually happens after the borrower stops making payments for whatever reason.
Foreclosure is a royal pain, very stressful. But just know that you are not alone it’s not the end of the world. Many have been there before you, and many will be there after..
When you know how foreclosure in TN works… it enables you to make sure you navigate it effectively and come out the other side with the least amount of financial damage as possible.
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 non-judicial sale. Tennessee is primarily a non-judicial sale state.
In either scenario, foreclosure typically doesn’t happen until 3-6 months of missed payments have occurred. Usually (but not always), the lender will send out many notices (nasty grams) that you are in arrears – overdue or behind in your payment.
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 Non-Judicial Foreclosure:
- The mortgage lender serves you with papers called Notice Of Default 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 can then sell your property to the lender at a public auction (notice must be given).
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.
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.
Here are some additional resource on avaiding foreclosure:
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 Provision Homes, LLC to help you negotiate discounts off the amount owed to avoid having to carry out a foreclosure.
If you are receiving nasty grams from the bank demanding payment know that you are definitely on their radar. They have set their sites on your house and they do intend to foreclose. You need to take action. We buy houses facing foreclosure on a regular basis. We can buy your house as-is fast with cash. No repairs, no banks, no closing costs. Take what you want and leave the rest behind.
If you happen to be upside down owing more than the house is worth we have been suscessful negotiating with the bank on your behalf. The goal is to get the bank to agree a smaller than owed pay-off and not come after you for the deficiency.
We buy houses in Murfreesboro TN like yours from people who need to sell fast.