Understanding the foreclosure process in TN is an important part of navigating your own home foreclosure.
Before we dive in…
Understanding the Foreclosure Process in TN
What is foreclosure anyway?
Foreclosure is the legal process that lenders use to take back property securing a loan, generally after the borrower stops making payments.
Foreclosure is no fun. But just know that it’s not the end of the world.
When you know how foreclosure in TN works… it arms you with the knowledge to make sure you navigate it well and come out the other end as well as possible.
The Basic Stages of A Foreclosure
The foreclosure process involves several critical stages that vary by state. Depending on the state, foreclosure can be initiated through a judicial sale or power of sale.
A judicial sale involves a court-supervised process, while a power of sale allows the lender to foreclose without court intervention. It’s essential to understand the specific foreclosure process in your locality to make informed decisions.
Typically, before the foreclosure process goes to court, the borrower must have missed several payments, usually between three to six months. Lenders typically send multiple notices to borrowers who are behind on their payments, informing them of their delinquency.
If you’re facing foreclosure in Memphis or the surrounding area, don’t hesitate to reach out to us at (901) 828-8419 or through our contact page. We can guide you through the local foreclosure process and help you make the best decisions for your situation.
Under Judicial Foreclosure:
When facing foreclosure, your mortgage lender will initiate legal action through the court system. The court will then send you a letter demanding payment.
Assuming the loan is valid, you’ll typically have around 30 days to make payment to the court to avoid foreclosure. In some cases, this payment period may be extended.
If you’re unable to make payment during the given period, the court will enter a judgment, and the lender may proceed with the sale of your property through an auction.
Once the property is sold, the sheriff will serve you an eviction notice, which will require you to vacate the property immediately. It’s important to keep in mind that foreclosure can be a lengthy and complex process, so seeking professional guidance from a foreclosure expert can be helpful in navigating the process and making the best decisions for your unique situation.
Under Power of Sale (or Non-Judicial Foreclosure):
In a non-judicial foreclosure, the mortgage lender will serve you with papers demanding payment, and the court’s involvement is not necessary, although the process may still be subject to judicial review.
Once the waiting period has elapsed, a deed of trust is drawn up, and control of your property is transferred to a trustee. The trustee is then authorized to sell your property at a public auction, and notice of the sale must be given.
It’s important to note that anyone with an interest in the property must be notified during the foreclosure process. For instance, contractors or banks with liens against a foreclosed property are entitled to collect from the proceedings of an auction. Therefore, proper notice must be given to all parties with a vested interest in the property.
Navigating the foreclosure process can be challenging, so it’s essential to seek professional guidance to ensure that you understand your rights and responsibilities and make the best decisions for your situation.
What Happens After A Foreclosure Auction?
After a foreclosure is complete, the loan amount is paid off with the sale proceeds.
Sometimes, if the sale of the property at auction isn’t enough to pay off the loan, a deficiency judgment can be issued against the borrower.
A deficiency judgment is where the bank gets a judgment against you, the borrower, for the remaining funds owed to the bank on the loan amount after the foreclosure sale.
Some states limit the amount owed in a deficiency judgment to the fair value of the property at the time of sale, while other states will allow the full loan amount to be assessed against the borrower.
Here’s a great resource that lists the state by state deficiency judgment laws, since every state is different.
Generally, it’s best to avoid a foreclosure auction. Instead, call up the bank, or work with a reputable real estate firm like us at Memphis Home Buyers to help you negotiate discounts off the amount owed to avoid having to carry out a foreclosure.
Experienced investors can help you by negotiating directly with banks to lower the amount you owe in a sale – or even eliminate it, even if your home is worth less than you owe.
If you need to sell a property near Memphis, we can help you.
We buy houses in Memphis TN like yours from people who need to sell fast.
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Another Foreclosure Resource For Memphis TN HomeOwners: