Foreclosures in Tennessee happen relatively quickly once the 120-day preforeclosure period that’s required, in most cases, under federal law expires. If you’re worried about, or if a foreclosure is looming, and you live in the state of Tennessee, you should learn about Tennessee’s foreclosure laws and procedures so you know exactly how the foreclosure process works and how long it will take.
Read on to find a synopsis of the basic information that generally applies to most homeowners facing foreclosure in Tennessee along with citations to the statutes so you can read the law yourself.
The citations to Tennessee’s foreclosure statutes are:
In Tennessee, the foreclosing party must:
On or before the date of the first publication, the trustee must mail the borrower a copy of the notice of sale. (Tenn. Code Ann. § 35-5-101).
In the case of a high-cost home loan (a type of mortgage loan where the annual percentage rate or points and fees exceed certain amounts), the lender must send a notice of right to cure to the borrower at least 30 days before publishing the notice of foreclosure. (Tenn. Code Ann. § 45-20-104).
“Reinstating” is when a borrower catches up on the missed payments, plus fees and costs, in order to stop a foreclosure. Tennessee, however, doesn’t have a law that gives a borrower the right to cure the default and reinstate the loan before the sale (unless the loan is a high-cost home loan). But the loan contract might provide time for the borrower to complete a reinstatement.
In the case of a high-cost home loan, the borrower can cure the default at any time prior to three business days before the sale. A borrower's right to cure the default prior to the foreclosure proceeding may be exercised once in any 12-month period. (Tenn. Code Ann. § 45-20-104).
Some states permit the borrower to redeem the home within a specific period of time after the foreclosure. 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. (Tenn. Code Ann. §§ 66-8-101 through 66-8-103).
When the total mortgage debt exceeds the foreclosure sale price, the difference is called a “deficiency.” Some states allow the lender to seek a personal judgment, called a “deficiency judgment,” against the borrower for this amount, while other states prohibit deficiency judgments with what are called anti-deficiency laws.
Tennessee doesn’t have an anti-deficiency law, which means the foreclosing party can file a separate lawsuit after the foreclosure sale to get a deficiency judgment. (Tenn. Code Ann. § 35-5-118). (For a summary of the deficiency law in Tennessee, see Nolo’s article Deficiency Judgments After Foreclosure in Tennessee.)
If you have questions about the foreclosure process in Tennessee or want to learn about potential defenses to a foreclosure, consider talking to a foreclosure lawyer. It’s also a good idea to make an appointment to speak to a HUD-approved housing counselor, especially if you want to learn about different loss mitigation (foreclosure avoidance) options.