How to Stop an FHA Foreclosure in Tennessee

A crucial first step to stop an FHA foreclosure in Tennessee is to know the specific clauses and stipulations that are part of your mortgage contract. A mortgage contract either contains a power of sale clause or not. If it does not contain the power of sale clause, the lender must sue you to obtain a court order to foreclose on your property (judicial foreclosure). When the contract does contain a power of sale clause, the lender can proceed with a foreclosure without going through the court system (non-judicial foreclosure). The state of Tennessee allows both non-judicial and judicial foreclosures, but court foreclosures are rare.

Instructions

1

Contact your lender as soon as you know there is a problem, before you miss payments or receive a Notice of Default. If your FHA-insured mortgage contains a power of sale clause, the lender can begin foreclosure proceedings as soon as a default occurs on the loan. The average foreclosure in Tennessee takes less than two months to complete.

2

Investigate current federal and state foreclosure-prevention programs and laws, such as the HOPE for Homeowners Act, the Mortgage Forgiveness and Debt Relief Act of 2007 and President Obama's Making Home Affordable Plan of 2010. The state of Tennessee also has the Keep My Tennessee Home program, and you can check your eligibility on their website, KeepMyTNHome.org. The federal government offers free foreclosure avoidance counseling to distressed homeowners at local FHA offices and provides a listing of foreclosure resources by state, at HUD.gov.

3

Talk to your lender or a loss mitigation (lender helps a borrower avoid foreclosure) specialist at the National HUD servicing center. The loss mitigation specialist should be familiar with available options to stop an FHA foreclosure in Tennessee, including an FHA Partial Claim. The FHA Partial Claim basically consists of an interest-free loan that brings your mortgage current if you are four to 12 months delinquent, and typically you repay the partial claim when you sell the property.

4

Request that your lender allow forbearance on your FHA loan. With forbearance, the lender agrees to temporarily stop collecting loan payments from you, usually for a few months. Typically, a lender only approves forbearance when you can prove your financial troubles are temporary and will be resolved in the near future.

5

Stop an FHA foreclosure in Tennessee by repaying the delinquent amount. Ask a family member or friend to borrow the money needed to bring your mortgage current, or you may be able to acquire the necessary funds with an alternative third-party loan or a mortgage refinance.

6

Sell your property to avoid foreclosure. If you know your fiscal health will not improve in the near future, talk to a loss mitigation specialist for a free evaluation to see if your property qualifies for a short sale (sale proceeds are less than the balance owed).

7

Apply for a deed-in-lieu of foreclosure with your lender. With this foreclosure avoidance option, you give the deed to your property to the lender and they accept the house as repayment of your loan.