Tennessee Foreclosure Laws

A Tennessee foreclosure can be accomplished either by judicial or non-judicial means. However, most of the state’s foreclosures are pursued outside the court system. Typical foreclosure timeline takes about 2 months. In-court foreclosures are seldom used because most mortgages and deeds of trust contain a Power of Sale clause which authorizes the lender to foreclose a defaulted borrower’s property through non-judicial procedure. This provision is initially signed by the borrower.

Under Tennessee foreclosure laws, the homeowner can stop the foreclosure proceedings at any point up until the date of the sale by paying off their debt plus any applicable costs to the lender.

Judicial And Non-Judicial Foreclosure Information

A judicial foreclosure occurs when the loan document does not contain a Power of Sale clause. To initiate the foreclosure under this method, the lender should file a complaint against the borrower who has defaulted on payments. This suit is also known as lis pendens, a public document stating that there is an impending foreclosure on a distressed property. The court has the final decision on this matter. At this point, borrower is given a specific time to cure debt. If the court finds sufficient evidence against the borrower, such as payment defaults or failure to respond to the lawsuit, the foreclosure sale will be scheduled.

A Tennessee foreclosure is administered out-of-court when the borrower has initially signed a Power of Sale in the mortgage agreement. This means that the borrower is aware of the consequence when he/she has failed to meet the terms of the contract. In order to satisfy the homeowner’s debt, a foreclosure sale is set and this does not require a court appearance.

Foreclosure laws in Tennessee supports statutory right of redemption. This would allow a person to reclaim ownership of a recently foreclosed property by providing a full payment of the total unpaid loan plus any applicable costs within 2 years of the sale.

A deficiency can be obtained by the lender if the income of the foreclosure sale is less than the amount of the mortgage loan. When a deficiency claim is granted to the lender, this means that the borrower has to pay for the difference between the amount of the property sold in the auction and the amount of the original loan.

Notice Of Sale Tennessee

A Notice of Sale is important and required under Tennessee foreclosure laws. At least 20 days before the auction, first publication of the Notice should be published. The Notice should be published thrice in a local weekly newspaper. The foreclosure sale is conducted like a public auction where the property is auction off to the highest bidder. At the auction, the bid may start at no less than 50% of the property’s market value.