If you’re a homeowner in Tennessee, it’s important to be aware of the state’s foreclosure laws. Unfortunately, many people go into foreclosure without knowing their rights or the options available to them. In this blog post, we’ll explain the basics of Tennessee foreclosure law and how you can avoid or sell your home in foreclosure. We’ll also provide links to additional resources where you can learn more about this topic. So let’s get started.
Foreclosure Laws in Tennessee
Federal and state rules governing foreclosure procedures and mortgage servicers were comparatively few and tended to mostly favor foreclosing lenders prior to the foreclosure crisis, which spiked in 2010. However, foreclosure proceedings and loan servicing are now extensively regulated by federal and state legislation. Additionally, debtors are protected by the majority of laws.
In general, servicers are required to offer debtors loss mitigation options, account for each stage of the foreclosure process, and rigorously adhere to state foreclosure laws. A deed of trust and a promissory note are generally considered acceptable by borrowers in Tennessee who take out loans to purchase residential property. In addition to the legal safeguards provided by the state and federal governments, these documents grant householders some contractual rights. In the Tennessee foreclosure process, you’ll probably be granted the following rights:
- Apply for loss mitigation
- A pre-foreclosure breach letter
- Receive a notice of foreclosure
- Keep your loan current, and prevent the foreclosure sale
- Get special protection if you are a member of the military
- Repay the debt to prevent a sale
- Apply for bankruptcy, as well as
- Keep any extra money from a foreclosure sale
If you’re a homeowner in Tennessee who is behind on your mortgage payments, don’t be shocked. Learn about every stage of a Tennessee foreclosure, from your first missed payment to the foreclosure sale. Once you are aware of the procedure, you may make the most of your predicament and, ideally, find a solution to keep your house. If not, at least go through it with as little stress as you can.
Home Loans in TN
A promissory note and a deed of trust are both typically required when you take out a loan to acquire residential property in Tennessee. The promise you made to repay the loan and the terms of your repayment are included in the promissory note. The document that gives the lender a security interest in the property and will probably include a power of sale clause is known as a deed of trust (also called a mortgage). If you don’t make your mortgage payments, the power of sale provision allows the lender to sell the property without going to court, allowing it to recoup the money it loaned you.
Missed Mortgage Payment
The servicer may usually charge a late fee after the grace period has ended if you miss a payment. The majority of mortgage loans have a ten to fifteen-day grace period before you incur late fees. To find out the grace period in your situation and the amount of the monthly late fee, review the promissory note or your monthly billing statement.
The servicer will send letters and try to contact you if you miss a few mortgage payments. The service is required by federal mortgage servicing rules to contact you (or attempt to contact you) by telephone at least once within 36 days after a missed payment and again every 36 days following until the loan is repaid in full. If you miss a payment, the servicer must notify you in writing within 45 days of receiving your request for information about loss mitigation possibilities and assign personnel to assist you. Certain rules may be broken if you have a medical emergency, end up in jail, or are otherwise unable to pay your bills. However, most of these requirements cannot be violated under any circumstances.
If you default on a Tennessee mortgage, the lender is required by law to send you a breach letter. This notification informs you that your loan has gone into default. If you don’t resolve the balance within 30 days, the lender may accelerate (or call) the loan and proceed with the foreclosure.
When Does Foreclosure Begin?
In most cases, the servicer must wait until a loan is over 120 days late before formally beginning foreclosure proceedings. However, in certain circumstances, such as if you violate a due-on-sale clause or if the servicer is adding its own foreclosure action to a superior or subordinate lienholder, the process may begin sooner.
Tennessee Foreclosure Process
A few things to know about foreclosure in Tennessee, the pre-foreclosure process begins when the homeowner misses three consecutive payments on the mortgage. At this point, the lender will send a letter notifying the homeowner of their intent to foreclose; this is also called a notice of foreclosure. The homeowner then has 30 days to cure the default and bring the loan current. If they fail to do so, the lender can start the foreclosure process.
In Tennessee, foreclosures are typically nonjudicial, which means they do not go through the court system. Instead, the lender simply needs to give the homeowner notice of their intent to foreclose. The foreclosure process can then proceed without further input from the court.
Once the foreclosure process in Tennessee has started, it can move quickly. The entire process can take as little as 90 days from start to finish. This means that it is important to act quickly if you are facing foreclosure.
If you don’t try to work out a repayment plan with your creditor or otherwise stop the foreclosure, you could lose your home. Not only will your house be foreclosed on and sold in a foreclosure sale, but the foreclosure will also be recorded on your credit report. This can damage your credit for years to come and make it difficult to obtain new financing.
If you are served with notice of a foreclosure, you should immediately seek legal assistance. An experienced foreclosure attorney can help you understand your legal rights and options under the law and can assist you in redeeming your home.
Foreclosure Laws as a Homeowner
In the event of foreclosure, federal regulations protect homeowners from loan negligence. These laws require lenders to support mortgage borrowers struggling with payments, safeguarding them against servicer misconduct and providing an excellent benefit for consumers.
According to federal law, creditors and servicers must assist borrowers with monthly payments or other financial difficulties including the following:
- Reach out to the borrower directly, either through a phone call or an in-person conversation.
- Give the borrower written notification of available mitigation. options like loan modifications, forbearance, or repayment plans
- Provide delinquent borrowers with one-on-one assistance.
- Supply written notice to preserve their right of redemption period post-foreclosure sale.
- Aid an individual who has filed for Chapter 13 bankruptcy.
- Furnish borrowers with information on the power of sale clause implications.
Avoiding Foreclosure in Tennessee
There are several ways to avoid foreclosure in TN. One way is to speak with your lender about a loan modification or to get a forbearance agreement in place. You can also try to sell your home before the foreclosure process begins. If you have fallen behind on your payments, you may be able to catch up by selling some of your belongings or taking on a second job.
If you are facing foreclosure in Tennessee, it is important to take action as soon as possible so that you can avoid losing your house to the bank. You can try to negotiate with your lender or contact a housing counseling agency for assistance. If you do nothing, the foreclosure process will move forward, and you could lose your home.
Can You Sell Your House in Foreclosure in Tennessee?
Yes, it is possible to sell a house in foreclosure in TN. If you are facing foreclosure, you may be able to sell your house to a third party. However, there are a few things you will need to do in order to sell your house in foreclosure.
First, you’ll need to determine the best way to sell your home quickly either by:
- Selling with a real estate agent
- Selling for sale by owner (FSBO)
- Selling to cash home buyers in Tennessee
If you decide to sell with an agent, you will need to sign a listing agreement. This agreement will give the agent the right to sell your house and for a commission.
If you decide to sell by owner, you will handle all aspects of the home sale. And if you decide to sell your house to a “we buy houses Knoxville” homebuyer, you’ll just request an offer on their website or by phone.
Next, you will need to price your house. The agent will help you determine a fair price for your house; if selling by yourself, it will be up to you to decide on the listing price.
Once your house is priced, the agent will list it on the market, or you’ll start advertising your ‘For Sale By Owner’. If you sell to a local cash home-buying company like Nexus Homebuyers, you can skip a lot of the traditional home-selling process, including listing and home repairs. Otherwise, you may be required to repair your house before it is listed if you sell with a realtor or sell by the owner.
It is important to note that you may not be able to sell your house for the full amount owed. You may also be required to pay a real estate commission, which can cost 5-6% of the purchase price.
Furthermore, there is no guarantee that your home will sell quickly, given the average time it takes to sell a house in Tennessee- from listing through closing — is approximately 72 days. That’s 37 days to get an offer, plus the typical 35-day closing period. However, if you were to sell to a home-buying company instead, you could get a cash offer for your home within 24 hours and close in as little as 7 days.
Selling a house in foreclosure can be a complicated process. You will need to figure out the best way to sell your home. You may also be required to make repairs to your house before it is listed. If you are facing foreclosure, selling your house to one of the companies that buy houses in Nashville might be the best option for you to save both time and money.
Foreclosure can be a complicated process, but the good news is that it is possible to sell your home in foreclosure. If you are facing foreclosure and would like to know more about the Tennessee foreclosure law on this topic, make sure to seek legal advice from a foreclosure lawyer or a law firm.
If you’re interested in selling your home feel free to contact Nexus Homebuyers today. We’ve helped multiple homeowners deal with foreclosures, Chapter 13 bankruptcy, divorce, probate, liens, and so much more. We’d be happy to explain more about our company and how it works, or simply visit our website for more information.
DISCLAIMER: This article is meant for educational purposes only and is not intended to be construed as financial, tax, or legal advice. Nexus Homebuyers always encourages you to reach out to an advisor regarding your own situation.