Most Tennessee foreclosures are conducted outside of the court system. This is called a non-judicial foreclosure. The typical foreclosure process takes less than two months in Tennessee.
In a Tennessee foreclosure, judicial foreclosures are very rare. Out-of-court proceedings are customary. However, they can occur when a Power of Sale clause exists in a mortgage or deed of trust that authorizes the lender to sell the property if the borrower defaults. After the borrower defaults on payments, the trustee assigned in the deed of trust has the authority to begin the foreclosure process.
The borrower can stop the foreclosure process prior to the sale by paying the total amount owed plus any applicable fees and penalties.
In a Tennessee foreclosure, the borrower generally gets the right to:
- receive a pre-foreclosure breach letter
- apply for loss mitigation
- receive notice of the foreclosure
- receive special protections if the borrower or spouse is in the military
- pay off the loan to prevent a sale
- file for bankruptcy
- redeem the home after the sale, and
- get any excess money after a foreclosure sale.
Notice of Sale & Auction
If the deed of trust or mortgage contains the Power of Sale clause it will specify the time, place, and terms of a sale. Based on that information the trustee conducted the sale following the specified procedure.
A Notice of Foreclosure Sale is required. It includes the names of all the affected parties and entities, a description of the property, and the date, time, and location of the sale. It also must include all liens on the property. The notice is required to be published three times in a local newspaper, and the first publication must appear a minimum of 20 days prior to the foreclosure sale.
State statute does not require any notification to anyone beyond the Notice of Foreclosure. However, generally the trustee will mail a notification of the sale to the borrower.
The sale is held by a trustee between 10:00am and 4:00pm. On a regular business day. At the end of the auction, the trustee transfers the ownership to the highest bidder.
Deeds of trust in Tennessee commonly do not allow the borrower to redeem the property after the sale. However, if this right has not been not waived in the mortgage or deed of trust then the borrower may redeem the property by paying the total debt plus costs within two years.