When a homeowner defaults on their mortgage in Nashville, TN, lenders can move to have the property seized by either judicial or non-judicial foreclosure. Following foreclosure, the homeowner will still have 24 months to reclaim their property, which is called the right of redemption period. They will have to satisfy the amount of the delinquency, in addition to any court costs or attorney fees. In addition, borrowers are subject to deficiency judgments by lender when a property sells at auction following foreclosure for less than what was owed on it. The borrower will be responsible for taking care of the remaining balance.
Types of Foreclosures Allowed in Nashville, TN
Judicial foreclosure, or foreclosure by judicial sale, is a process that involves selling the defaulted property under court supervision. This type of foreclosure is only possible when the mortgage documents do not include a power of sale clause. The process begins when a lender files a formal complaint against the borrower to obtain a decree of sale. The court will then allow the mortgagor some time to pay the default, but if they cannot, the property will be sold at auction to the highest bidder.
Non-judicial foreclosure is also allowed in Nashville, TN. This type of foreclosure allows the lender to sell the property without court supervision. In order for non-judicial foreclosure to be possible, the mortgage documents must contain a power of sale clause, which authorizes the lender to sell the property in the event of default.
There are times in which the power of sale clause states specific requirements for the sale of the property, which the lender must follow. However, if there are no specific requirements, then the sale must be held between 10 a.m. and 4 p.m. and sold for cash to the highest bidder.