Selling in East Tennessee
Behind on Your Mortgage in Knoxville? Act While It Is Early
Pre-foreclosure is the stretch between the first missed payment and a trustee’s sale. The earlier you act in it, the more choices you have, and that includes a short sale that can spare you a foreclosure on your record.
Why early matters so much
Every way out except the auction needs your lender’s agreement, and agreement takes time. A forbearance or a modification needs a complete application. A short sale needs a buyer, then a written approval from every lienholder. Starting while you are one, two or three payments behind gives each of them room to work. Starting after a sale date is published often does not.
A short sale is not free of consequences: it shows on a credit report, and the lender’s approval letter has to say what happens to any balance left over. But it is usually a better record than a foreclosure, and under many loan programs the wait before you can qualify for another mortgage is shorter after a short sale. The rules differ by program, so ask a lender for yours.
This is general information, not legal, tax or credit advice. See the note at the foot of the page.
Where are you in it?
| Stage | What usually happens | What it means for you |
|---|---|---|
| One or two payments behind | Late fees, calls and letters from the servicer. The servicer has to reach out about options. The loan is in trouble, not in foreclosure. | This is the best time to act. Every door is still open, including simply catching up. |
| Three or four payments behind | A demand or breach letter says how much will cure the default and by when. Federal servicing rules generally keep a servicer from starting foreclosure until a loan is more than 120 days behind. | Still early. A complete loss-mitigation application sent now has to be reviewed, and a short sale has time to be approved. |
| A notice of trustee’s sale | The trustee named in your deed of trust publishes a notice with a sale date. Tennessee foreclosures are non-judicial, so no court hearing comes first. | Late, not over. Call a Tennessee real estate attorney the same day; a lender rarely postpones a sale for an offer that arrives late. |
| The trustee’s sale | The house is sold at public auction on the courthouse steps. | After the sale, the options on this page are gone. That is why the first two rows matter. |
Five things to do this week
- Open every letter from the servicer. The dates and the cure amount are in them. Put them in one folder.
- Call a HUD-approved housing counselor. Free, and works for neither the lender nor us. Find one near Knoxville.
- Ask the servicer for a payoff letter and a loss-mitigation application. The payoff letter decides whether a sale pays the loan off or falls short. The application is how a modification, a forbearance or a short sale starts.
- Write down the hardship. A job loss, a medical bill, a divorce, a death, a move for work. One page, with dates. Every option asks for it.
- Take the free short sale check. Two minutes, about the loan and the timing, never about what the house is worth. It names the path that fits, and keeping the house is one of the answers.
Watch for rescue scams
A homeowner with a foreclosure notice gets mail and calls from strangers. Walk away from anyone who asks for a fee up front to “save” the house, tells you to stop talking to your lender or counselor, asks you to sign the deed over to them, or tells you to send your payments to them instead of the servicer. The housing counselor is free; so is asking.
Is a short sale on the table for you? Find out in two minutes.
Take the FREE “Is a Short Sale on the Table?” Quiz. It asks about the loan, the hardship and whether a sale date is set, never about what the house is worth. You get the path that fits and a plain first step right on the page. Keeping the house and “a short sale is not for you” are both answers it can give.
Start the FREE check →Want the whole picture first? Short sales in Knoxville, TN compares a short sale with a modification, a traditional sale, a deed in lieu and foreclosure.
General information, not legal or tax advice. A short sale, a deed in lieu and a foreclosure each carry questions about any deficiency and about forgiven debt — talk to a Tennessee attorney and a CPA before you sign anything. A HUD-approved housing counselor is free and works for neither the lender nor us.