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How does the foreclosure process work and can I stop it?

Many Tennessee residents are on the verge of losing their homes due to their inability to make their mortgage payments. Interest rate increases, unemployment, medical or other debt, or divorce are the chief culprits — among a variety of other things. The word foreclosure can be a scary thing for a lot of people, but any fear associated with it is usually just a fear of the unknown. This week, this column will discuss how the foreclosure process works and options for stopping it.

Generally speaking, and with some variation from state to state, there are five phases of the foreclosure process. The first is borrower default. This means that the borrower has missed a bare minimum of one payment. At this point, the lender will usually send a missed payment notice and charge a late payment fee. This could go on for a couple of months and a few missed payments.

The second is the sending of a notice of default. After a borrow has missed three to six payments and no arrangements to catch up have been made, the lender will then send a NOD to the borrow and the County Recorder’s Office. At this point, the borrow has 90 days to make a payment.

The third is the recording of a notice of a trustee’s sale. Once this is filed with the County Recorder’s Office, the lender has to wait a few weeks before it can put the home up for auction. The borrow still has the opportunity to make a payment and stop the process up until five days before the scheduled auction date.

The fourth is auction. If the borrower fails to make payments, the home will go up for auction and will be sold to the highest bidder. If the home does not sell, this leads to phase five: the property becoming bank-owned. The bank will then decide what it wants to do with the home.

The foreclosure process is not something that can be completed overnight. It takes months and there are several opportunities for the borrow to stop it by making payments, selling the property or, if it is believed a better option, filing for bankruptcy. Tennessee residents who are facing foreclosure can turn to an experienced bankruptcy law attorney to discuss their options and find the best solution to their problem.

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