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The Ins and Outs of Foreclosure in Alabama

Foreclosure is the legal process where your mortgage company gains ownership of your house, also known as repossessing the property. It occurs when the homeowner can’t make a payment on their mortgage or has defaulted or violated its terms. 

Read on to learn more about this process. 

What Happens if My Property is Foreclosed On? 

When a lender repossesses a home, it can be stressful, embarrassing, and have long-lasting ramifications for the borrower. Voluntarily walking away from your home might sound like the best solution when it’s valued lower than what you owe. However, you may need to pay a fraction of your mortgage debt even after your home is foreclosed on in certain states. Your credit score may suffer if this happens to you, making it difficult to rent an apartment or purchase another house. 

Here are some frequently asked questions. 

Q: How do mortgages work?

A: Alabama is a title theory state, meaning the property title remains in trust until a homeowner makes a complete payment for the underlying loan. The document that secures this title is known as a deed of trust or a mortgage.

Q: What happens when a mortgage is foreclosed?

A: Alabama’s primary method is known as non-judicial foreclosure. Most mortgages contain a provision called a power of sale clause, which allows an attorney to foreclose on the property to satisfy the underlying loan. Before initiating this process, the attorney conducting it needs to file a notice of sale that indicates it’s pending. 

Fortunately, the homeowner may make a mortgage payment to stop the repossession as long as they make it before the property sale. Additionally, they must pay their fees in full. Alabama is different from other states because a mortgage lender may need to go to court for a judicial proceeding where the court will issue a final judgment. 

Q: How long does it take to foreclose a house?

A: This process can take approximately 60-90 days when it comes to uncontested non-judicial foreclosures. However, it may be delayed if the homeowner contests the action in court, seeks delays and adjournments of sales, or files for bankruptcy. 

Q: What is a right of redemption?

A: Alabama has a statutory right of redemption, which allows a homeowner whose house has been foreclosed to reclaim it by making a payment within one year after the sale. It’s important to know that a Deed in Lieu of Foreclosure doesn’t provide a right of redemption, nor does it permit a deficiency judgment. A deficiency judgment is the imposition of personal liability on a borrower for their unpaid balance of mortgage debt. 

Local Home Buyers is Here for You

If you can’t keep up with your mortgage payments, you should be proactive in saving your home from foreclosure. If you live in Huntsville, Alabama, Local Home Buyers can solve your real estate problems that pose a financial burden to you. 

We want to help you control your situation so that you can get back to living the life you want to live. Don’t just take our word for it; check out our client testimonials page. Connect with us today

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