How to avoid foreclosure in Alabama

How foreclosure works in Alabama, step by step

1. You miss payments

   Your servicer must try to reach you and tell you about options to avoid foreclosure. Under federal rules it usually cannot start the foreclosure until you are more than 120 days behind. Use this time to ask for help in writing.

   12 C.F.R. § 1024.41(f)

2. Default letter and redemption notice

   Your mortgage contract may require a letter that tells you how much you owe and gives you time to catch up, so read your mortgage for that deadline. If you claimed a homestead exemption on the home, the lender must also mail you a notice about redemption rights by certified mail at least 30 days before the sale date.

   Ala. Code § 6-5-248(h)

3. Sale is advertised

   The sale notice must run once a week for three weeks in a row in a newspaper in the county where the home is. The notice gives the time, place and terms of the sale. State law does not require a court hearing first.

   Ala. Code § 35-10-13

4. Auction at the courthouse

   The home is sold to the highest bidder at the main door of the county courthouse between 11 a.m. and 4 p.m. on the sale date. The lender is often the buyer. The buyer receives a foreclosure deed.

   Ala. Code §§ 35-10-12, 35-10-14

5. Demand for possession

   The buyer can send you a written demand to move out. You have 10 days after that demand to leave. If you stay past the 10 days, you lose your right to buy the home back, and the buyer can ask a court to remove you.

   Ala. Code § 6-5-251

6. Redemption period

   After the sale you may still be able to buy the home back by paying the sale price plus interest and other lawful charges. You have 180 days if you claimed a homestead exemption on the home for the year of the sale, or one year for other property.

   Ala. Code §§ 6-5-248, 6-5-253

Alabama foreclosure deadlines to know

These are the periods written into the law. Your own dates are on the notices you received. If a notice and this page disagree, trust the notice and ask a counselor or lawyer.

Your rights as a homeowner in Alabama

Other Alabama protections

• Redemption rights notice for homestead property

  If you claimed a homestead exemption, the lender must mail you a notice by certified mail at least 30 days before the sale saying that you may have redemption rights and that programs may exist to help. A missing notice does not undo the sale, but your redemption clock does not start until the notice is given, up to one year after the sale.

  Ala. Code § 6-5-248(h)

• Right to redeem after the sale

  Unlike most states, Alabama lets former owners, spouses, children and heirs buy the home back after a foreclosure sale within the redemption period.

  Ala. Code § 6-5-248

• Itemized cost of redemption is set by law

  The price to redeem is the sale price plus interest and listed lawful charges such as taxes, insurance and permanent improvements. Liens that you owed are revived when you redeem.

  Ala. Code § 6-5-253

Alabama mortgage assistance programs

If the home is sold for more than you owe

If the sale brings in more than you owe plus sale costs, the extra money normally goes first to other lienholders and then to you. We did not find an Alabama statute that sets a claim process for a power of sale foreclosure, so ask the foreclosing attorney in writing for an accounting of the sale proceeds.

Ways to avoid foreclosure

Most of your options come from federal rules and from whoever owns or insures your loan, so they work the same way in Alabama as anywhere else. What changes by state is how much time you have to use them.

• Repayment plan
• Forbearance
• Payment deferral or partial claim
• Loan modification
• Reinstatement
• Short sale
• Deed in lieu of foreclosure
• Chapter 13 bankruptcy