Committee looks to streamline process, protect homeowners

NASHVILLE, August 18, 2010 — Amid the continuing wave of home loan defaults, foreclosure procedure in Tennessee is getting a fresh look by the Tennessee Bar Association as a special committee examines the procedures employed when homeowners default on their home loans and enter foreclosure.

The committee, chaired by Chattanooga lawyer Hal North, held its first organizational meeting last week and plans to meet monthly during the fall. It is composed of a balanced group of lawyers who represent banks, consumers, lenders and those who deal with bankruptcies, and is an outgrowth of legislative attention -- arising from the mortgage crisis -- to the procedures employed when homeowners default on paying their loans.

In Tennessee, foreclosures are rarely handled through the court system, but routinely are carried out by trustees for the lender. After a homeowner becomes in default of his mortgage, the lender is required to give notice to the homeowner that it intends to proceed with foreclosure. The lender must publish a notice of foreclosure at least three times, within 20 days, before the foreclosure sale. The lender may bid in the amount of its debt at the foreclosure sale, and if the bid amount is less than the amount of the debt, the lender may thereafter pursue the collection of a deficiency balance against the homeowner. If the lender is the successful bidder at the foreclosure sale, it becomes the legal owner of the property, and may then proceed to resell the property. The committee is examining several procedural steps in an effort to reduce the cost of foreclosure by streamlining the process while, at the same time, protecting homeowners.

"We can't do anything to put more money in the hands of consumers so they can pay their loans," said TBA President Sam Elliott, "but we can work to ensure the process protects consumers and lenders, and works as efficiently and effectively as it can to obtain the best results for all involved."

The committee is chaired by North, a shareholder with Chambliss, Bahner & Stophel PC. Other members include:

Mary Aronov with Baker, Donelson, Bearman, Caldwell & Berkowitz PC (Memphis)
Sam Blaiss, Attorney at Law (Memphis)
Bob Goodrich with Stites & Harbison PLLC (Nashville)
Joe Kirkland with Kirkland Rothman-Branning & Associates PLLC (Memphis)
Greg Logue with Woolf, McClane, Bright, Allen & Carpenter PLLC (Knoxville)
Alisa Peters with Burr & Forman LLP (Nashville)
Mark Rosser with First American Title Insurance Company (Knoxville)
Brooks Smith with Bradley Arant Boult Cummings LLP (Nashville)
Ernest B. Williams IV with Ernest B. Williams IV PLLC (Nashville)
Mike Williamson with the Williamson Law Office (Clarksville)
Terry Woods with Legal Aid of East Tennessee (Knoxville)

The committee, which can be contacted at foreclosure@tnbar.org, invites interested individuals to follow its activities.

Reporter inquiries should be directed to TBA Executive Director Allan Ramsaur at (615) 383-7421.