The Mortgage Foreclosure Process
When you realize that you can no longer pay your mortgage and are starting to fall behind, you may feel a sense of panic. The foreclosure process in Tennessee works quickly, and in as little as four months you could lose your home. Before it comes to that point, make sure you understand the foreclosure process and what your options are to avoid it.
Here’s what Tennessee homeowners need to know about the foreclosure process and what they can do to avoid losing their home.
Homeowner Rights During
If you fail to pay back your loan, your lender has the right to take back your home. But you have rights too. The lender has rules to follow to give you enough notice to bring the loan current. If the lender fails to follow proper proceedings, you can turn to a foreclosure attorney for help stopping the foreclosure.
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The Tennessee Foreclosure Procedure in a Nutshell
Notice of Default
Tennessee foreclosure laws allow for both judicial and nonjudicial foreclosure, but the majority of the state’s foreclosures are nonjudicial. Typically, when a borrower is 90 days or more past due on mortgage payments, the lender will send a notice of default and start the foreclosure process.
Notice of Sale
Next, the lender must publish a public Notice of Sale listed three times over 20 days in a newspaper or online news resource.
After the notice, the home is sold at auction. At the auction, an attorney sells the home to the highest bidder, which is often the lender. The entire process, from the first missed payment to the foreclosure sale, can take as little as four months.
Vacate the Property
After foreclosure, a homeowner typically has 30 days to vacate the property. Rental tenants who are residing in the foreclosed home typically have 90 days to prepare to leave.
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Tennessee Foreclosure Facts
If the home sale does not cover the debt, the lender can file a deficiency judgment. This is a bill for the difference between the sale price and debt owed.
Tennessee offers a statutory right of redemption period of two years provided the loan documents do not waive this right.
Homeowners that fail to pay their property taxes can also face foreclosure in the form of a tax sale.
The probate process does not stop foreclosure in Tennessee. After a borrower’s death, the estate must continue to pay the mortgage to avoid foreclosure.
In addition to lowering your credit score, a foreclosure will make you look like a high risk to lenders, making future mortgage loans challenging.
On average, a foreclosure will stay on your credit report for seven years. This can make it harder to get a new mortgage or rental agreement.
Alternatives to Foreclosure in Tennessee
Distressed homeowners often seek to sell their home as a short sale, which will require bank approval. A short sale occurs when you sell the home for less than what you owe, allowing the lender and the homeowner to avoid the hassle and expenses of foreclosure.
Tennessee homeowners can file for bankruptcy as an alternative to foreclosure. This process will stop foreclosure proceedings and collection activities, granting the homeowner much needed time to make a plan.
Loan modification is alternative to foreclosure in Tennessee. A loan modification involves communicating with the lender about your financial struggles, then working out a plan that will make your mortgage more affordable. To get loan modification help, you will need to reach out to your lender before the foreclosure process begins.
Because of the long-term credit problems that foreclosure creates, you may wish to sell your house instead of entering the foreclosure process. Selling your house as is allows you to sell fast, without making repairs or updates.
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