How to Stop Foreclosure in Tennessee: 8 Effective Ways

Foreclosure in any aspect is a negative situation. No homeowner will ever want to foreclose their home because of any financial crisis. Facing foreclosure is an awful situation. There are two ways through which the foreclosure takes place: Judicial and Non-Judicial. Tennessee allows a judicial foreclosure. The foreclosure process has to follow state law. There are ways to stop foreclosure, through which you can save your home.

What Does Foreclosure Means?

Taking a loan from a bank or a lender to buy a house or property is very common everywhere. Paying back the borrowed amount in the given time duration is also very important. If someone fails to pay back the loan amount, the foreclosure situation is very likely to come into existence. Foreclosure begins after the very first missed payment.

Foreclosure can also happen if the homeowner fails to pay the property tax levied upon them. There are various reasons for falling behind in payments like, financial crisis, medical emergencies, and sudden loss of job.

Introduction to Foreclosure in Tennessee

The foreclosure crisis peaked in 2010. The foreclosure process and mortgage services were heavily supported by state and federal laws after that. In Tennessee, people must sign a promissory note and mortgage when they take a loan to buy property. These documents give people some contractual rights as well.

Tennessee foreclosures most likely give you the right to many benefits. They are:

Receive notice in the form of a breach letter before foreclosure.
You can apply for loan mitigation.
If you are in the military, you will get special protection.
Get notified about the foreclosure and chance to respond legally.
Pay off your debt to prevent a foreclosure sale.
You can redeem the property after the sale.
Get any excess money after a foreclosure sale.

Key Points About Tennessee Foreclosures

Primary Security Instrument- Mortgage and Deed of Trust
Judicial Foreclosure- Yes
Non-Judicial Foreclosure- Yes
Right of Redemption- Yes
Timeline- Typically 60 Days
Deficiency Judgements Allowed- Yes

Ways to Stop Foreclosure in Tennessee

There are ways of stopping home foreclosures in Tennessee that you need to know. Let’s cover them all:

Declare Bankruptcy

Yes, bankruptcy is a way through which foreclosure can be stopped. But you need to understand the concept of chapter 7 and chapter 13 of bankruptcy.

Chapter 13 bankruptcy in Tennessee: It is a common option to go for to stop foreclosure. According to chapter 13 bankruptcy, you are given a payment plan of 3 or 5 years to catch up with the payment in arrears. The lenders will be given orders to stop going forward with the foreclosure process. They will have to give you time to get back to your payment arrangements.

Chapter 7 bankruptcy in Tennessee: It is a liquidation form of bankruptcy. Unless you want the Tennessee bankruptcy trustee to sell your house, it may be a less common option to pursue. Even though it is the lower-cost bankruptcy option, you may not want to opt for it.

You need to understand what your payment plan is. Is your payment plan regarding chapter 13 bankruptcy worth pursuing? For instance: you have $150,000 in arrears on your house and your payment plan is for 5 years / 60 months. Will you be able to pay an additional $2,500 every month to cover your arrears?

Applying for Loan Modification

It has become difficult to fully pay off the mortgage payments. There are many reasons why you can miss out on payments or get late in paying the mortgage. Before this unwanted thing happens, you may go to your lender and find out if they consider a loan modification option.

» Best Tennessee Mortgage Lenders: Read out the blog to know about the best mortgage lenders in Tennessee.

Reinstating Your Loan

Do you have enough cash to pay off all the loan amount? Approach your lender with cash. See if they accept the payment and permit you to continue paying your loan amount without any legal interference. Lenders only want to recover the loan amount and so they will accept your offer.

Plan for Repayment

Great! You can make payments again after missing out on some payments. Find out what your lender thinks regarding your repayment plan. In the repayment plan, you are allowed to pay the missed payments slowly along with the current mortgage payments. You can come up with an agreement on the repayment plan to stop foreclosure. According to this, you agree to pay your missed payments along with the normal payments.

Refinancing

Refinancing may be a difficult option to consider. Interest rates are going up only making it difficult to think of loans. You can start with a new lender which means a whole new agreement. There may be one drawback. It might become difficult to qualify for refinancing if your credit score is negatively affected.

Sell Out Your Home

It’s really sad even to think of selling your house. But it is actually a good option to consider selling your home in Tennessee to avoid foreclosure. You may receive an amount more than the actual price of your home. Perhaps you could even buy a house worth more than the one you sold. You can stop something drastic from happening and your credit report will also not get spoilt.

» Who Pays Closing Costs on a Home Sale in Tennessee: Read the blog to know who pays closing costs in Tennessee.

Short Sale

A short sale means that you can sell your home for an amount that is less than the amount you owe. The reason behind this is that sometimes your home is sold for a lesser amount in the auction. The bank/lender is sometimes not able to recover the whole amount they are hoping for.

Deed In Lieu of Foreclosure

A deed in lieu of foreclosure takes place when the homeowner transfers the property to the lender. The homeowner hand over the property to the lender, clearing all the debts they owe. For a homeowner, this is the best time to sell a house in Tennessee as it will be helpful to pull you out of the foreclosure. The property is then owned by the lender. You have to vacate the property as soon as possible. This way you can easily save yourself from any damage.

Frequently Asked Questions

How long does it take to foreclose on a house in Tennessee?

That means that if the bank or other mortgage lender moves promptly from one step to the next as soon as the law allows, the foreclosure sale could take place less than six months from the date of the first missed payment.

Is there a foreclosure redemption period in Tennessee?

Redemption Period After a Foreclosure Sale in Tennessee.
In Tennessee, the borrower gets two years after the foreclosure to redeem the home unless the mortgage or deed of trust specifically waives the right of redemption, which these documents often do.

How does foreclosure work in TN?

Foreclosure in Tennessee:
Because Tennessee is a Non-Judicial foreclosure State, the mortgage holder does not need to go through the courts to auction off the property. However, if the legality of the foreclosure is in question, the matter can always be appealed to the court by either party.

What is the redemption period in Tennessee?

Redemption Period:
An order confirming the tax sale is entered into the court records within 45 business days of the sale date. Once the order is complete, the property is eligible for redemption. If the IRS holds a lien on the property, the right of redemption is 120 days from the date of the sale.

Selling a Home As Is in Tennessee: Read the blog to know about selling a house as is in Tennessee.
Selling a House by Owner in Tennessee: Go through the blog to know about selling a house by owner in Tennessee.
How Much is the Closing Cost in Tennessee: Click to know how much are the closing costs in Tennessee.
Tennessee Housing Market: Check out the blog to know about the details of the Tennessee housing market.
Low Commission Realtors Near Me: Click here to know about the low commission real estate companies.

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