Are you one of the many homeowners who believe that walking away and allowing a foreclosure is the best solution? Make sure you know about TN Foreclosure laws.
It's not over just because you no longer own the home.
Tennessee Legislature Adopts New Foreclosure Deficiency
Judgment and Notice Statutes
On June 2, 2010, Governor Bredesen signed into law Tennessee's new foreclosure deficiency statute, which drastically changes the law for determining the deficiency judgment a creditor may recover after a foreclosure sale pursuant to a deed of trust. The new statute, effective September 1, 2010, applies to foreclosures of both residential and commercial property and is a major change to existing Tennessee law. Previously, the foreclosure sale price obtained at a regularly-conducted foreclosure sale determined the amount of credit to be applied to the loan balance unless fraud or similar misconduct contributed to a lower sale price. The amount of a deficiency judgment was based on the difference between the loan balance (including cost for foreclosure) and the foreclosure sale price. The new statute allows a borrower to challenge the foreclosure sale price, for deficiency purposes, based on the "fair market value" of the property at the time of the foreclosure sale. The statute provides that the foreclosure sale price is presumed to be the fair market value, but the presumption can be overcome if, by a preponderance of the evidence, the debtor establishes that the property sold for an amount materially less than the fair market value of the property at the time of foreclosure. If so, the amount of deficiency would be the total amount of the indebtedness less the "true" fair market value of the property at the time of the sale as so established. The statute does not provide definitions of "materially less" or "fair market value."
In addition, the statute contains a limitation of two years after a foreclosure sale within which a lender can institute a legal proceeding to recover a deficiency. Tennessee’s General Assembly also amended the state’s foreclosure statute to require the sending of a Notice of the Right to Foreclosure to a borrower at least 60 days prior to the first publication of a foreclosure notice. The amendment is effective July 1, 2010, and applies to foreclosures published on or after September 1, 2010. Information required in the Notice is specified in the statute, which includes availability of federal loan modification programs and contact information for federal agencies.
Source : Bass, Berry & Sims Commercial and Financial Services Litigation Attorneys
We are not attorneys and advise everyone to consult with an attorney to know your rights and obligations.