Life happens. And everyone goes through a time in life when there’s a hardship that might cause financial obstacles.
Whether you’ve hit a “bump” on the road with paying your mortgage, or you’ve lost your job, or some other financial distress — it doesn’t matter — we want to help you and give you ALL The information you need to make the best decision for your situation.
Because everyone’s situation is different — but the process for foreclosure and the little ways to stop it don’t change.
Before you go, if you didn’t know…
Alabama, is a “non Foreclosure”.
That means that the lender doesn’t have to go through a lawsuit or court process to take your home.
Good in that you don’t have to deal with a messy lawsuit.
But, typically this type of foreclosure is much faster than judicial.
Let me break down the steps of foreclosure in Alabama:
**Before we go on… know that we’re not lawyers. We are only house buyers. Consult with an attorney regarding foreclosure law and what you can formally and legally do. This article is only meant to entertain and inform from our point of view, which is not legal advice.
The initial step in the non-judicial foreclosure process is for the lender to confirm that the mortgage or deed of trust contains a Power of Sale provision. This clause grants the lender the contractual authority to foreclose and sell the property in the event of borrower default without seeking judicial approval.
Although Alabama law does not explicitly require the issuance of a notice of default or demand letter prior to foreclosure, most mortgage agreements include provisions mandating that the lender notify the borrower of the default. This notification typically provides the borrower with a 30-day period to cure the default by paying the outstanding amounts owed, including any applicable late fees or penalties.
Pursuant to Alabama Code § 35-10-8, the lender must provide public notice of the foreclosure sale. This notice must be published in a newspaper of general circulation in the county where the property is located. The statutory requirements for publication are as follows: the notice must appear once per week, for three (3) consecutive weeks, prior to the scheduled date of the foreclosure sale.
In addition to newspaper publication, the lender is required to post a copy of the foreclosure sale notice at the courthouse of the county in which the property is situated. This ensures public awareness of the pending sale.
Following proper notice, the lender may proceed with the foreclosure sale. In Alabama, foreclosure sales are customarily conducted as public auctions held at the county courthouse. The property is sold to the highest bidder, which is often the lender if no higher offers are received.
Upon completion of the foreclosure sale, the successful bidder receives a foreclosure deed. This legal document transfers ownership of the property from the borrower to the purchaser at the foreclosure sale.
Alabama law generally does not provide a statutory right of redemption for borrowers following a non-judicial foreclosure. However, limited exceptions apply. For mortgages executed prior to January 1, 2016, and involving a borrower’s homestead property, certain rights of redemption may still exist for a period following the sale.
**It’s important to note that these timelines are approximate and can be influenced by various factors, including court backlogs, borrower responses, and the complexity of the case. It’s advisable to consult with a foreclosure attorney or seek legal advice for precise timelines
The right agent can make selling your home a breeze, but the wrong one can turn it into a headache. By knowing what to look for (and what to avoid), you can make an informed choice that puts you on the path to a successful sale. And if you ever decide that the traditional route isn’t for you, we’re here to offer a simpler, faster alternative.
You can actually work out a compromise with the bank during the NOD stage. They WANT to help. They don’t want to take up the hassle of owning a property, and/or going into the auction. They can work out a new agreement that modifies your loan to something you can afford and makes sense to them. It’s as easy as calling the number they give (they should have mailed you a few times by now)
In some counties, for every offer you receive the bank MUST consider it. And if you owe more than what the house is worth, you’ll have to do what’s called a “short sale” which means you sell for less than the loan amount. And sometimes The truth is, if a bank takes over your house, they are going to try and immediately sell it (and sell it for a VERY low price to an investor); they actually DON’T want that hassle. And will consider a “short sale” offer instead — even if it means they’ll lose money. After the NOD has been initiated, it’s important to start searching for offers immediately for banks to consider.
This stops foreclosure dead in its tracks. Once you file a bankruptcy petition, federal law prohibits any debt collectors, including your mortgage lender, from continuing any collection (including foreclosure. This might sound like an ideal situation, but here’s the truth of it: You’ll have to go to court, and your debt collectors (the bank/lender) will also appear in front of the judge. The judge’s role is to play “referee” between you and the bank, and you still might have to owe after that. The method only buys you time, and the judge may create a “payment plan” for all that you owe. It doesn’t necessarily “erase” foreclosure… and… it will be on your record for a while. Consult with a bankruptcy attorney regarding whether filing for bankruptcy is a good strategy for you.
You can, through negotiation, offer to sign over the house deed to the bank/lender. They become the new owner overnight and you won’t get the equity, and you’ll have to leave the house or be evicted. This method certainly does stop foreclosure easily and quickly, but with some drawbacks. First off, lenders are reluctant to take over a deed. They don’t want to become property owners, only collect mortgages. This method is usually done when you’ve had your house listed for sale for quite a while, but still can’t sell it AND you’ve presented a case that you’re in financial hardship and can’t find any way to make payments. In those cases, the banks will consider a Deed in lieu. However, even when all these factors are present, many lenders will not agree to a deed in lieu, but it is worth a try!
Most loans these days are no longer assumable. The average mortgage now contains a “due on sale” clause by which the borrower agrees to pay the loan off entirely if and when they transfer the property. However, if you are facing foreclosure, you might be able to persuade your lender to modify your loan, delete this clause and allow another buyer to assume your loan. The lender may want to assess the new buyer’s qualifications, but it can be a win-win-win option for all. You might be able to negotiate a down payment from the buyer which you can use to pay off your outstanding past-due mortgage balance.
This is one of my favorites, but in this scenario, the prospective buyer becomes your tenant (at first), and you continue owning the property until the buyer has saved enough down payment money, improved their credit sufficiently or sold their other home. In most situations, the buyer will make a one-time, lump option payment upfront, paying you to obtain the option to purchase your home. How does this stop your foreclosure? When this tenant pays a lump sum to buy their option, that lump could be enough to bring your mortgage current and remove the NOD. Then, you have a tenant (who has an interest in buying your property so he/she will most likely always make payments on time), who’ll pay the mortgage. Of course, in this scenario, you can’t live in the house with your tenant… but it is a very quick and easy way to stop the foreclosure AND keep your asset!
I promised a 7th way, and it’s something we’ve most likely offered to you already.
We can buy your house in 30 days (typically)…
… And you don’t have to make a single repair…
… nor pay for closing costs or agent fees…
.. and you can even leave all your unwanted things behind.
It’s one of the easiest and quickest ways to get out of foreclosure AND get money in your pocket (if you’re not too much “underwater”)
