Foreclosure Law in Tennessee

In Lenoir City, Tennessee is a process permitting a lender of a mortgage to take possession or ownership of the property that secured the mortgage in the first place, to cut their losses when a borrower defaults on his or her loan.

When consumers have to deal with foreclosure, it almost always involves a home. The bank will usually take possession of the house, and then sell it at auction, to try to cover the balance of the mortgage. Banks normally want sell the property quickly, for as much money as possible.

In every state, including Tennessee, homeowners have the option to go through what is known as a foreclosure by judicial sale. Basically, this means a court will oversee the sale of the house to ensure that the bank makes reasonable efforts to sell it for as high a price as possible (to help avoid a deficiency that the borrower may have to pay), and to ensure that any money which might be left over from the sale (after the balance on the mortgage is paid) goes to the borrower.

In a large number of states, but not all of them, mortgages are a type of loan recognized as a "non-recourse loan." While the regulations governing these loans are complex, it most basically means that, once the house is sold, and the sale price doesn't cover what the borrower owes, the lender can't go after the borrower for the remainder. They simply have to take the loss.

How to Possibly Avoid Foreclosure in Lenoir City, Tennessee

To avoid foreclosure, communicating with your lender is key. Let's face it - if you're in a situation where foreclosure looks like a possibility, your life is not going to be easy for some time. While it's difficult to step up and acknowledge unpleasant facts, doing so will make your life much easier in the long run. If your lender is aware of your situation, it's far more likely that you'll be able to work something out with them.

You should remember that the bank doesn't really want your house. They issued a mortgage hoping to make a profit from interest, and that's what they'd much rather do. They aren't in the business of buying and managing real estate. Therefore, banks will sometimes go to surprising lengths to accommodate your financial hardship, especially if it's temporary.

If you face sudden expenses, such as medical bills or a lawsuit, which put a serious but relatively short-term strain on your finances, you should notify your lender immediately. You might find that they are willing to accept lower payments, if this will prevent you from defaulting.

Finally, there is the "short sale." Normally considered a last resort, a short sale results in the borrower losing their home, but discharges almost all of their remaining mortgage debt. If the house is worth far less than the balance of the mortgage, this might be a good option. In Tennessee, when a house is sold in a short sale, the proceeds go to the lender. If it sells for less than the mortgage balance, whatever's leftover is forgiven. If it sells for more, the surplus goes to the homeowner.

Can a Lenoir City, Tennessee real estate attorney help?

If you are worried that your Lenoir City, Tennessee house is going to be foreclosed, and want to try and stop this, a brilliant real estate lawyer can help.