A Tennessee property was sold at a non-judicial foreclosure auction for $145,000, but the outstanding loan balance was $162,000. The lender wants to recover the remaining $17,000 from the borrower. What is this legal remedy called, and is it generally available to lenders in Tennessee?
Correct Answer
B) It is called a deficiency judgment, and Tennessee lenders may seek it through a separate court action after the foreclosure sale.
When foreclosure sale proceeds are insufficient to cover the outstanding loan balance, the difference is called a deficiency. In Tennessee, lenders may seek a deficiency judgment against the borrower through a separate court action after the non-judicial foreclosure sale. Unlike some states that prohibit deficiency judgments after non-judicial foreclosures, Tennessee generally permits them, subject to certain limitations.
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Related Topics & Key Terms
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Related Concepts
An adjustable-rate mortgage (ARM) has an interest rate that changes periodically based on market conditions, typically after an initial fixed-rate period. The rate adjustment is tied to a financial index plus a margin.
Closing costs are the fees and expenses paid by the buyer and seller at the closing of a real estate transaction, beyond the purchase price. They typically range from 2-5% of the purchase price.
A conventional loan is a mortgage that is not insured or guaranteed by a government agency such as the FHA, VA, or USDA. It is originated and funded by private lenders and may be conforming or non-conforming.
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