In recent years, lenders have been forced to defend a record number of so-called “wrongful foreclosure” lawsuits. However, several Tennessee court rulings issued this year indicate that if lenders act quickly and offensively, they may prevent these challenges.

Typically, the story goes something like this: Borrowers fall behind on their payments, and the lender notifies them that they may qualify for a loan modification—either through the lender’s own program or through a government sponsored program like the Home Affordable Modification Program. So, borrowers send in a portion of the required documentation and make a couple of the trial payments. But, the modification is denied based either on failure to submit a completed modification packet or failure to make all of the trial payments, and the lender forecloses.

Originally published in The Tennessee Banker 2015.