Tennessee Foreclosure Prevention Efforts

For 2009, Tennessee ranked 17th among all states in foreclosure rate, a drop of 7.75% from the year before. Nationally, 2009 was the worse year for foreclosures in US history, with 2.8 million property owners receiving a foreclosure notice.

Compared to some states, the foreclosure process in Tennessee can be quite rapid. It takes as little as two months.

Foreclosures are rarely done in court, since almost all mortgages in the state contain a clause that authorizes the lender to sell due to a default. When a borrower defaults, the trustee named in the deed of trust has the authority to initiate the foreclosure.

The foreclosure sale notice includes the name of the borrower, description of the property and the time and place of the sale. It must be published three times in a newspaper with the first publication at least 20 days before the sale.

If the borrower is still in possession of the property a notice of sale must also be served upon him or her at least twenty days prior to the date of the sale The homeowner may stop the procedure up to the time of the sale by paying the entire debt plus fees.

Deficiency judgments are allowed in the state if the sale price doesn’t cover the entire mortgage. The borrower has up to two years to redeem the property, unless that right was waived in the deed of trust.

Tennessee’s Foreclosure Intervention Initiative was launched in November 2007 to raise public awareness of the problem and to grant funds to train certified counselors

On September 18, 2008 the state initiated the Great Save Loan Program. It is an opportunity for Tennesseans of modest means to convert their adjustable rate mortgages to fixed rate 30 year home loans funded by tax exempt bonds. Here’s the application.

On May 13, 2009, Governor Phil Bredesen signed House Bill 2218 which makes it an unfair or deceptive practice in violation of the Tennessee Consumer Protection Act to charge upfront fees for foreclosure prevention consulting.

The state now participates in the Nationwide Mortgage Licensing System and Registry for the mortgage industry.

Since the foreclosure process is so quick in Tennessee it is absolutely imperative that if you are facing an anticipated problem in paying your mortgage you contact your loan servicer immediately to try to arrange forbearance or a loan modification. As always a refinance is the best way to keep your good credit.

The state’s major foreclosure prevention efforts are implemented through the Tennessee Housing Development Agency (THDA.) Its mission is “Leading Tennessee Home by creating safe sound affordable housing opportunities.” If you’re facing foreclosure the THDA urges you to take the following steps:

• Do not ignore the situation. Act now. Start the conversation early. It is not in your lender’s best interests to foreclose on your property, since it is a costly process.
• Locate and read your mortgage documents. If you don’t understand them, talk to your servicer, the company to which you send your payments.
• Some home loans start fixed, then adjust. If you have an ARM, adjustable rate mortgage, can you afford the new payments?

Tennessee foreclosure counseling agencies team up with lenders and churches to offer foreclosure prevention counseling sessions. One of the most successful recent gatherings was “Foreclosure Intervention Day—Mortgage Solutions Now” sponsored by the US Department of Housing and Urban Development (HUD) approved agency Home Free USA. Pay attention to the local news for these events, or submit a request for foreclosure help from Home Free USA online.

Here’s a complete list of HUD approved counseling agencies in Tennessee.

If you feel that you’ve been the victim of predatory lending, or need to file a complaint about a financial institution contact Consumer Resources of the Tennessee Department of Financial Institutions Monday-Friday, 8 a.m.-4:30 p.m. CST at 1-(800) 778-4215