When a lender institutes foreclosure proceedings, most states give the borrower a period of time to pay off the entire amount owed and thus recover the property. In Tennessee, this period is two years after foreclosure. However, many Tennessee borrowers sign a deed of trust that waives this right to redemption.
Tennessee uses the deed of trust to accelerate foreclosure proceedings. Unlike a typical mortgage, in which the lender must get a judicial ruling to begin foreclosure, the deed of trust allows a third-party trustee to foreclose on behalf of the lender without going to court ; this is a nonjudicial foreclosure. Even in nonjudicial foreclosure, the lender must give the borrower notice that he's in default and the lender is beginning foreclosure. Typically, after seizing the property, the lender will then sell the property in a foreclosure sale via auction to the highest bidder. Foreclosure proceedings may vary by lender; the foreclosure proceedings for a specific mortgage will be described in the mortgage or its accompanying deed of trust.
Right of Redemption
Even after a new buyer purchases the foreclosed property at the foreclosure sale, the original borrower may be able to get the property back. If the state's statutes provide for a "right of redemption," the borrower can pay off the redemption amount -- usually the entire amount of the loan and fees, and reclaim the property. Tennessee law allows a borrower to redeem the property within two years of the foreclosure sale. However, the court in a foreclosure action also has the right to limit or cancel this statutory right of redemption. The right of redemption can make it difficult to sell the property, as prospective buyers will often want to wait until the redemption period has passed.
Waiver of Redemption
In practice, Tennessee borrowers rarely get to exercise their right of redemption, due to the prevalence of the deed of trust in Tennessee. Most deeds of trust contain a "power of sale" clause that explicitly gives the trustee the right to sell the property upon foreclosure. Once the borrower signs the deed of trust, he gives consent to this power of sale clause and thus waives his right of redemption. He also doesn't have any sort of automatic right to buy his own house back at the foreclosure sale.
If a Tennessee borrower has waived her right of redemption, she can try to prevent foreclosure by securing an injunction before the sale, but it's not an easy process. If a borrower plans to seek such an injunction, she must give at least five days' notice to the lender before filing her petition. The borrower must present clear evidence to the court of immediate, irreparable injury if the injunction isn't granted. The borrower can also ask a court to set aside the foreclosure sale itself, but this requires proof of some wrongful aspect of the foreclosure proceedings. If the foreclosure went by the book, the borrower's options may be quite limited.