Tennessee and Number of Insertions Prior to Foreclosure

In Tennessee the banks are putting pressure on the legislators that will reduce the mandatory number of insertions prior to foreclosure. Their argument is that it is too expensive. In Tennessee a court order is not required for foreclosure but there is a law that thrice insertions have to be given in local newspapers before the lender forecloses.

It is generating much opposition. Shelley Courington of AARP in Tennessee said, "This is just a good way for communities to keep a watch out".

A bill to this effect is winding through the state legislature after the bursting of the bubble caused property prices to tumble following wave after wave of foreclosures. From 2006 till 2008 foreclosures went up by 50% and it continues to remain at a high level according to RealtyTrac as well as Moody’s Analytics.

A House sub-committee recently cleared the bill – it being the first step before it reaches the floor of the house. There are nine co-sponsors to the bill including Craig Fitzhugh the Democrat leader of the House. He is a bank executive of the state and also the president of the banker’s association.

Sen. Jack Johnson is sponsoring the bill in the Senate. He was formerly a banker and at present chairperson of Senate Commerce Committee. Lt. Governor Ron Ramsey has given limited support to the bill.  There are indications that many other legislators are inclined towards the bill.

The banks subscribed over $200,000 to the candidates for the legislature and the post of governor in 2010. It includes $184,750 that was given to 134 candidates through political action committee of Tennessee Bankers Association. These contributions are the same as in the previous years.

The dollars went to those candidates who according to the organization would "make good public officials and leaders" and would not allow the TBA to enjoy any undue influence in the Tennessee Legislature. The banks argue that the bill will save money for the consumers as ultimately it is they who bear the expenses.

There is strong opposition to the bill from many quarters. The mortgage contract generally has a clause that expects the borrowers to finance the notifications; the amount could be from a few hundred dollars to $3,000 depending on how long the insertion is and the rate of the newspaper; this rate depends on the paper’s circulation.