How Many Missed Payments before Foreclosure? – We Buy Houses in Tennessee

According to the state law in Tennessee, you must have missed about four payments before foreclosure sets in. This translates into four months or 120 days since most payments occur monthly.

When taking loans or commercial credit facilities from banks and lenders, they usually require a form of security and collateral. This security is an asset whose value is near the total amount of loan obtained. This action is taken to secure the lender’s interest. In case the borrower fails to pay up or balance the loan, the bank or lender can take over the asset in a bid to balance up the loan.

In most cases, buildings and land properties are used as security and collateral. The process of taking over the ownership of the property to satisfy the defaulting loan is called foreclosure. In this article, the concept of foreclosure will be discussed. The legal right of the borrowers in avoiding foreclosure will also be considered, focusing on how many missed payments before foreclosure are allowed and many more.

Basically, you will learn everything you need to know about foreclosure and a borrower’s rights in this article.

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The Concept of Foreclosure

Foreclosure doesn’t only occur when you fail to pay back a loan from a bank or credit financial facility. Another way through which a property can be foreclosed is when a homeowner refuses to pay appropriate property taxes and homeowners association fees. In all of these cases, the underlying reason for the dispossessing of a property is the failure to make required payments. However, the question arises as to how many payments may be missed before such a property can be foreclosed. The straight and simple answer is four payments, as long as the payments are made monthly. The law requires that only when a debtor is more than 120 days delinquent on payments.

Read More: How to Sell a House with a Mortgage

By foreclosure, we mean that the servicer sells the property in order to recoup the loan that the borrower failed to pay up. This is set out in an agreement signed by both parties at the inception of the loan. The borrower at the inception of the loan or mortgage recognizes the right of the lender, which could be a bank, mortgage provider, or any other credit facility, to take over the property should the borrower defaults in servicing the loan or mortgage.

Why do Properties Get Foreclosed?

One should understand that at the beginning of the mortgage or loan, there is usually an assurance that the borrower will be able to pay up the loan. The bank or mortgage provider ensures this by vetting the borrower’s finances, income, and other financial records before agreeing to the loan or mortgage. Despite all of these verifications, some borrowers still have their property foreclosed in order to service their loans. In this section, we will discuss some reasons where borrowers may face foreclosure.

Unworthy Properties

Some homeowners intentionally stop paying their mortgage due to a lack of motivation to continue paying the mortgage. This situation usually occurs when the mortgage is underwater or the property is considered unworthy. What this implies is that the mortgage to be paid is higher than the value of the property. As such, the mortgage holder loses all the motivation to pay and decides to allow the mortgage provider to take over the home.

Increase in Mortgage

Again, this is very common with mortgage holders. Usually, their mortgages are adjustable rate mortgages. This means that the interest on the mortgage may increase with time. When this increase occurs, and the holder cannot afford to pay the mortgage, foreclosure sets in. Mortgage holders are advised to read and understand the terms of the mortgage before taking it. This helps them avoid any surprises or unexpected increases.

What you should know about Foreclosure in Tennessee

Different federal and state laws protect defaulters before and during the foreclosure process. One of such law states that the bank or mortgage provider must provide different options for the avoidance of foreclosure. This law specifies that the creditor must make a call within 36 days of missing your payment, and write a letter within 45 days of missing your payment, in order to discuss other options for the repayment of the loan or mortgage.

There are two types of foreclosure; Judicial and Non-Judicial. The judicial method involves the bank or mortgage provider writing a court to notify it of the situation and request for an order of sale. However, in Tennessee, the most likely type of foreclosure is Non-Judicial. The creditor goes ahead with the foreclosure process without informing the court. This type of foreclosure is legal and can be upheld in court.

It is also faster than the judicial foreclosure process. It requires the bank or mortgage provider to post a notice of foreclosure in a newspaper 20 days before the sale. If however, there is no newspaper in the vicinity, there must be a notice posted on several public places 30 days before the sale. All of these is to create awareness and inform the public of the foreclosure. Moreover, the defaulter must be sent a copy of the foreclosure notice on or before the first publication.

The state law also allows the creditor to file for a deficiency judgment after a non-judicial foreclosure. This is usually done where the value of the property is less than the total mortgage. The difference between the value of the property and the mortgage value is known as a deficiency. This amount will be payable to the creditor by the borrower if the judgment is granted.

Avoid the risk of foreclosure

If you are at risk of foreclosure, do yourself a favor and solicit the aid of the local team, like Aniya Equity LLC, who can quickly review your situation.  Aniya Equity buys homes in any condition or situation.

Sell Your House Fast | We Buy Houses

For a free, no-obligation consultation call: 615-669-1610, or Fill Out This Form For Your FAIR Offer