Foreclosure Process and Laws in Tennessee

Facing a foreclosure can be a very stressful experience for a Tennessee homeowner. However, understanding the state’s foreclosure laws is the first step toward navigating your way through this challenging process. Tennessee allows both judicial and nonjudicial foreclosures, meaning lenders can foreclose either through court proceedings or a faster, out-of-court process. Most foreclosures are nonjudicial.

Tennessee foreclosure laws specify how nonjudicial procedures work, and both federal and state laws give you rights and protections throughout the foreclosure. Because Tennessee foreclosures are usually pretty fast, taking just around five or six months after a payment default, you should make sure you understand your rights and be proactive if you want to save your home.

What Are My Foreclosure Rights in Tennessee?

Both federal and state laws govern foreclosure procedures in Tennessee, and your mortgage documents give you rights during the process.

Your Mortgage Rights in Tennessee

If you get a loan to buy residential real estate in Tennessee, you'll likely sign two documents: a promissory note and a deed of trust. The promissory note is the document that contains your promise to repay the loan along with the repayment terms. The deed of trust, which is very similar to a mortgage, is the document that gives the lender a security interest in the property and will probably include a power of sale clause. If you fail to make the payments, the power of sale clause gives the lender the right to sell the home nonjudicially to recoup the money it loaned you.

You also get rights under the deed of trust and promissory note. For example, if you're late making your monthly payment, most promissory notes provide a grace period of ten to fifteen days before you'll incur late charges. To find out the grace period in your situation and the amount of the late fee, review the promissory note or your monthly billing statement.

If you default on payments, most deeds of trust require the lender to send you a breach letter (a preforeclosure notice) before officially starting a foreclosure. This notice tells you that the loan is in default. If you don't cure the default, the lender can accelerate the loan (call it due) and go ahead with the foreclosure.

Your Rights Under Federal Foreclosure Laws

In most cases, federal mortgage servicing laws require the servicer to contact you (or attempt to contact you) by phone to discuss foreclosure alternatives, called "loss mitigation" options, no later than 36 days after a missed payment and again within 36 days after each following missed payment. (12 C.F.R. § 1024.39 (2025).)

No more than 45 days after a missed payment, the servicer must let you know in writing about loss mitigation options that could be available and assign personnel to help you. There are a couple of exceptions to these requirements, like if you file for bankruptcy or tell the servicer not to contact you under the Fair Debt Collection Practices Act. (12 C.F.R. § 1024.39) (2025).)

Federal law also generally requires the servicer to wait until the loan is over 120 days delinquent before officially starting a foreclosure. But in a few situations, like if you violate a due-on-sale clause or if the servicer is joining the foreclosure action of a superior or subordinate lienholder, the foreclosure can begin sooner. (12 C.F.R. § 1024.41 (2025).)

Protections If You're in the Military

If you're in the military, the federal Servicemembers Civil Relief Act provides certain legal protections against foreclosure.

Other Foreclosure Rights for Tennessee Homeowners

In a Tennessee foreclosure, you also have the right to:

• receive a foreclosure notice
• pay off the loan to prevent a sale
• file for bankruptcy, and
• get any excess money after a foreclosure sale.

What Are the Different Types of Foreclosure in Tennessee?

If you fail to make your mortgage payments in Tennessee, the lender can foreclose on your property through either a judicial or nonjudicial method.

Judicial Foreclosures

A judicial foreclosure begins when the lender files a lawsuit seeking court approval to sell the property. If you fail to respond to the lawsuit with a written answer, the lender automatically wins the case. However, if you contest the lawsuit, the court will examine the evidence and decide the outcome. If the lender prevails, the judge will issue a judgment and order the property to be sold at auction.

Nonjudicial Foreclosures

In a nonjudicial foreclosure, the lender follows out-of-court procedures outlined in Tennessee foreclosure laws. After completing these steps, the lender can proceed with selling the property at a foreclosure sale.

Nonjudicial foreclosures are typically faster and less expensive than judicial ones, making them the preferred choice for most lenders

What Are the Steps in the Tennessee Foreclosure Process?

Again, most Tennessee foreclosures are nonjudicial.

Notice of the Foreclosure

In a nonjudicial Tennessee foreclosure, the lender has to:

• publish a notice of sale in a newspaper three different times in some newspaper published in the county where the sale is to be made, with the first publication at least 20 days before the sale or
• post the notice of sale in several public places 30 days before the sale if no newspaper is published in the county where the sale is to be held. (Tenn. Code §§ 35-5-101 to 35-5-103 (2025).)

On or before the first publication date, the trustee has to mail you (the borrower) a copy of the notice of sale. (Tenn. Code § 35-5-101 (2025).).

Tennessee Foreclosure Sales

The sale is an auction, which is open to the public. At the sale, the lender usually makes a credit bid. The lender can bid up to the total amount owed, including fees and costs, or it may bid less. The property becomes "real estate owned" (REO) if the lender is the highest bidder. However, if a third party is the highest bidder and the sale results in excess proceeds (more money than what's needed to pay off all the liens on your property), you're entitled to that surplus money.

In some states, including Tennessee, when the lender is the high bidder at the sale but bids less than the total debt, it can get a deficiency judgment against the borrower (see below).

What Are the Options Available for Borrowers During Foreclosure in Tennessee?

You might be able to prevent a foreclosure sale by reinstating the loan, redeeming the property before or after the sale, filing for bankruptcy, or working out a loss mitigation option, like a loan modification, short sale, or deed in lieu of foreclosure.

Right to Reinstate Before the Foreclosure Sale in Tennessee

“Reinstating” is when a borrower pays the overdue amount, plus fees and costs, to bring the loan current and stop a foreclosure. Tennessee, however, doesn’t have a law that gives a borrower the right to cure the default and reinstate before the sale unless the loan is a high-cost home loan. (Tenn. Code § 45-20-104 (2025).)

However, the deed of trust you signed when you took out the loan might provide time for you to complete a reinstatement.

Redemption Period After a Foreclosure Sale in Tennessee

Some states have a law that gives a foreclosed homeowner time after the foreclosure sale to redeem the property. 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 §§ 66-8-101 through 66-8-103 (2025).)

In addition, homeowners in Tennessee get the right to redeem the property before the sale by paying off the mortgage loan.

Filing for Bankruptcy

If you're facing a foreclosure, filing for bankruptcy might help. Once you file for bankruptcy, something called an "automatic stay" goes into effect. The stay functions as an injunction prohibiting the lender from foreclosing on your home or trying to collect its debt, at least temporarily.

In many cases, filing for Chapter 7 bankruptcy can delay the foreclosure by a matter of months and eliminate other debts. But if you're behind in mortgage payments when you file, you won't be able to keep your home. To stay in your house, you must be current on payments and be able to protect your equity with an exemption. However, you won't owe anything after foreclosure because Chapter 7 erases mortgage debt. If you want to save your home and you're behind in payments, filing for Chapter 13 bankruptcy might be the answer. To find out about the options available, speak with a local bankruptcy attorney.

Deficiency Judgments Following the Sale in Tennessee

Sometimes, a foreclosure sale doesn’t bring in enough money to pay off the full amount owed on the loan. The difference between the sale price and the total debt is called a “deficiency balance.” Many states, including Tennessee, allow the lender to get a personal judgment, called a “deficiency judgment,” for this amount against the borrower.

To get a deficiency judgment in Tennessee, the lender has to file a separate lawsuit after the foreclosure sale. If the borrower can prove that the property sold for an amount materially less than the fair market value at the foreclosure sale, then the deficiency judgment will be limited to the total debt minus the fair market value of the property at the time of the sale. (Tenn. Code § 35-5-117 (2025).)

Essential Tips for Dealing with a Tennessee Foreclosure

If you're facing foreclosure in Tennessee, it's important to take immediate steps to protect your home. Here are key tips to help you navigate the Tennessee foreclosure process:

• Open and read all mail from your lender and loan servicer. A foreclosure notice and information about loss mitigation options will come by mail. Don't ignore them. Important deadlines and opportunities to avoid foreclosure are often time-sensitive.
• Contact your loan servicer immediately. If you've fallen behind on your mortgage payments, you don't have to wait for the lender or servicer to contact you. Contact your loan servicer right away. Keeping the lines of communication open ensures you can find out about the status of the foreclosure and learn about possible alternatives to foreclosure.
• Know your legal rights in Tennessee. It's vital to understand your rights as a homeowner. You might be able to fight foreclosure by challenging legal errors or violations.
• Don't delay. Foreclosures in Tennessee happen quickly under the state's nonjudicial foreclosure process. Whether you're trying to challenge a foreclosure in court, apply for a loss mitigation option, or sell your home, the sooner you act, the more options you'll have.

Getting Help from a Tennessee Foreclosure Lawyer

Foreclosure laws are complicated. Servicers and lenders sometimes make errors or forget steps. If you think your servicer or lender failed to complete a required step, made a mistake, or violated state or federal foreclosure laws, you might have a defense that could force a restart to the foreclosure, or you might have leverage to work out an alternative.

Consider talking to a local foreclosure attorney or legal aid office immediately to learn about your rights. A lawyer can also tell you about different ways to avoid foreclosure. Likewise, a HUD-approved housing counselor can provide helpful information (at no cost) about various alternatives to foreclosure.