Foreclosure Laws in Tennessee: What You Need to Know
Here at My Tennessee Home Solution we keep legality and your protection as our priority. We want to help you learn all about Tennessee foreclosure law and how you can use them to buy a home. If you are in the market for a new house, then this information will be invaluable to you. It can help you decide if Tennessee is right for you or not!
Foreclosure law in Tennessee encompasses many aspects of the foreclosure process including notification requirements, exemptions from seizure, and more. Read on to learn more about what it takes to buy property in this state! starting off with the basics!
What is the Foreclosure Process in Tennessee?
Foreclosure is a process that can happen to homeowners who are unable to make their mortgage payments. Foreclosures in Tennessee were at their peak during the Great Recession, but there will always be hard times and people going through challenges. The foreclosure process varies by state, but it usually begins with a notice of default from the lender. They will then schedule a date for the homeowner’s walk-through if they haven’t already done so. After that, they may schedule an auction date or allow bids on the property before taking ownership through what is called “power of sale.”
The foreclosure process can be lengthy and difficult to go through alone, so we recommend talking to your lender about any available options before proceeding down this path.
Tennessee Foreclosure Laws and Procedures
First, it’s important to understand the difference between judicial and non-judicial foreclosures in Tennessee. A judicial foreclosure is one where a lawsuit must be filed against you by your lender before they take ownership of the property through power of sale. The only time when you will see a judicial foreclosure is if you file for bankruptcy and the court rules that your home must be sold.
A non-judicial foreclosure means that there isn’t any need to go through the courts, which speeds up this process considerably. This typically occurs when you default on your mortgage payments and don’t take action with them as quickly as possible.
In Tennessee, the foreclosure process starts with your lender sending you a notice of default and right to cure. This is an official letter stating that you have failed to make payments on your house for some time now and must do so immediately if you want to keep it. You will then get either a notice of trustee’s sale or a notice of power of sale. The difference between the two is that with a trustee’s sale, the lender takes possession of your home after 90 days.
The notice of the right to foreclose shall be sent not less than sixty (60) days prior to the first publication required by § 35-5-117.
If you get a notice for power of sale, then they will take ownership through the process known as an auction to sell which means that other investors can bid on your property and it’s possible that you could lose out. If this does happen, the investor who bought your property at the auction must give you a written notice of redemption. This gives you an additional six months to get back on track with payments and stay in your home.
How Can I Stop a Foreclosure in Tennessee?
This is a question many homeowners ask themselves and their family law attorney. Foreclosure proceedings can be long, complicated, and costly; the process of foreclosure typically takes about 12 months or more to complete. If you are facing foreclosure in Tennessee, there are measures that you can take to stop it from happening.
Getting court-ordered relief from creditors:
Court ordered relief is when a judge decides that your debts outweigh your assets and tells your creditors to stop all collections activity until either (1) your financial situation improves; or (2) the statute of limitations on the specific type of account expires. It also means that any pending lawsuits can be withdrawn if it is determined that you don’t owe money on the debt in question.
When Can I File for Court Ordered Relief? You can file for court-ordered relief when (a) there are enough assets to pay all of your debts; (b) it appears likely that you will be able to re-establish a positive financial situation in the future (c) you have a source of income to pay for basic expenses and (d) your creditors are harming you by continuing collection efforts.
Negotiating with your lender outside of bankruptcy proceedings:
If you are unable to file for court-ordered relief, but your income is too high for a Chapter 13 bankruptcy; then negotiating with your lender outside of bankruptcy proceedings may be an option. This process requires cooperation between yourself and the creditor which will most likely require that you submit financial information so they can determine whether you can afford to make a payment on your loan.
It is important to note that if you default under this agreement, the creditor will be able to move forward with foreclosure proceedings against you and foreclose upon your home without notice or warning.
A side note that we have to leave is the fact that foreclosures affect all members of our community even our veterans, If you are a member of the military and you are afraid that you are going to lose your home while you are on active duty, don’t be concerned.
Is Tennessee a non judicial foreclosure state?
Yes, Tennessee is a non-judicial foreclosure state. This means that when you file for bankruptcy protection under Chapter 13 of the Bankruptcy Code, your lender can’t foreclose on your property while you are making payments under the plan. If this is something that concerns you and has been keeping you from filing for bankruptcy relief, it’s important to know that Tennessee law protects homeowners who want to keep their homes during bankruptcy proceedings.
Is Tennessee a recourse state?
No, Tennessee is a non-recourse state, meaning if someone walks away from their mortgage and defaults on the loan, they may still owe money on the home. The lender will take whatever equity they have left in the property and try to sell it at auction or foreclose on it.
What are the 3 types of foreclosure?
There are three types of foreclosure: judicial, non-judicial, and power of sale.
Judicial foreclosures are the most common type of foreclosure where a lender or mortgage company starts by filing for bankruptcy or initiating an action against the homeowner to repossess their home.
Non-judicial foreclosures can happen when there is no way to make payments on time due to hardship or other reasons that fall outside the borrower’s control.
Power of Sale foreclosures occur when a lender goes through with selling off your house after you have defaulted on your loan terms for more than two months without paying anything towards it. The best thing you can do if this happens is contact a lawyer right away since some states allow homeowners some rights during these proceedings which could help them keep their home.
The foreclosure process in Tennessee is complicated and can seem overwhelming. For that reason, it’s important to have a knowledgeable legal advisor by your side throughout the entire experience. At My Tennessee Home Solution we understand what homeowners are going through because many of us were once struggling with similar financial issues.
We know how hard it is for people who don’t speak English well or aren’t educated about these matters to navigate this complex system alone, which is why our team has vowed to never turn any homeowner away no matter their circumstances or background.
If you need help to sell your house fast in Nashville and/or understanding your options and dealing with the emotional toll of being foreclosed on while still keeping up with life as usual, please give us a call today.