How Long Does a Foreclosure Take in Tennessee?
The time line of the foreclosure process varies from state to state. Generally, in states that offer non-judicial foreclosure methods to lenders, the process is faster than judicial foreclosures. Tennessee foreclosures are most typically conducted out of the court system. This method takes approximately two months to complete. Judicial foreclosures generally take longer, around four months, depending on the court schedule.
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Security Instrument
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When a mortgage loan is obtained, the borrowers present the property as collateral to the lending institution. Until the loan is paid off, the property technically doesn't belong to the borrower. Tennessee operates under the title theory of lending. At the time a loan is taken out against a property, the lender must have the borrowers sign a series of documents. One of these documents is known as the security instrument. In title theory states, the instrument is known as the deed of trust. The function of the deed of trust is to place the property title in the hands of a legally qualified trustee appointed by the lender or the state. The deed of trust also specifies the terms and conditions of the loan, and stipulates a power of sale clause. This clause will allow the trustee to sell the property without court interjection in the event the borrowers default on the loan.
Pre-Foreclosure
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Pre-foreclosure begins with the first missed mortgage payment. Sometimes, one missed payment may only heed a late fee and a warning. Specific lenders may even offer a five- to 15-day grace period after the due date for the borrower to make a payment. However, 30 days after a missed payment, the account is usually deemed in default. The amount of payments missed before a lender will initiate foreclosure will vary, but in general it is 90 days. In Tennessee, lenders are required to notify the borrower that their property will be sold at a foreclosure auction. This must occur at last 20 days before the scheduled sale. The notice must also be published in a local newspaper for at least three weeks prior to the sale.
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Auction Sale
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In Tennessee, the county sheriff holds the auction sale at the time, date and place advertised in the notice. By law, a sheriff sale needs to occur between 10 a.m. and 4 p.m. The sale occurs in typical auction format, with the highest bidder winning. The sheriff is allowed to set the starting bid, as long as it is equal to 50 percent of the fair market value of the property. Bidders should be ready to pay in cash the amount of their bid on the day of the sale. Upon the end of the sale, the sheriff will sign a deed granting property ownership to the winning bidder.
Considerations
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The non-judicial foreclosure process in Tennessee proceeds fairly quick. If a borrower knows he is facing financial hardship, he should contact his lender before any missed payments. The lender may be willing to work with the borrower to modify the loan terms. The foreclosure process is costly to the lender because it is losing money on the loan payments, plus it accrues fees to go through the procedure.
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