Foreclosure in Alabama

How an Alabama foreclosure works, step by step

1. Generally, the legal foreclosure process can't start until you're at least 120 days behind.
2. If a homestead exemption was claimed on your home for the tax year of the sale, the lender must send you a notice about your right to redeem, by certified mail to the property address, at least 30 days before the foreclosure date. It says Alabama law gives some people the right to redeem the property in some cases, and that programs may exist to help you avoid or delay foreclosure.
3. Notice of the sale runs once a week for three weeks in a row in a newspaper in the county where the land is. It gives the time, place and terms of the sale and describes the property. The redemption notice must be part of it too.
4. The auction is held at the front or main door of the courthouse in the county where the land is, between 11 a.m. and 4 p.m. on the sale day.
5. The deed from the sale gives the buyer legal title to the home.
6. If the buyer makes a written demand for possession, you must hand over the home within 10 days. If you don't, you lose your right to redeem.
7. You can redeem within 180 days of the sale if a homestead exemption was claimed on the home that tax year, or within one year for other property.

Before the sale: catching up and other ways out

• A repayment plan is a deal with your lender to make up missed payments by adding part of the past-due amount to your regular payments for a while.
• Under federal rules, if your servicer gets a complete application for help more than 37 days before a sale, it must act on it within 30 days.
• Before a short sale, ask your lender to waive the deficiency, the gap between the home's value and what you still owe, if your state makes you responsible for it.
• A deed in lieu of foreclosure hands the lender all your rights in the home, including your rights of redemption, unless the deed says otherwise.
• You have the right to stay in your home during the whole foreclosure process.

Call your servicer early, while you still have the most choices.

The auction at the courthouse door

The sale must take place at the courthouse door, meaning the front or main door, in the county where the land or a large part of it is. It's held between 11 a.m. and 4 p.m. on the day set for the sale. The newspaper notice tells you the time, place and terms.

The power to sell can be used by anyone who becomes entitled to the money, by assignment or otherwise. The deed to the winning bidder vests legal title in that buyer.

If you're watching for a sale date, check the legal notices in your county's newspaper.

How long it takes

Foreclosure generally can't legally start until you're at least 120 days behind. Once it starts, how long you have until the sale depends on your state.

For FHA loans, HUD's time frame runs from the first legal action until the lender has clear title to the home and possession of it. In Alabama, that's 6 months, and HUD lists publication as the first legal action.

Without a lawsuit, the notices set the pace: for a homestead, a redemption notice mailed at least 30 days before the sale, and for every sale, a newspaper notice once a week for three weeks. After the sale, the redemption window is 180 days for a home with a homestead exemption, or one year for other property.

These are official markers, not a forecast. Your case can move faster or slower, so don't count on extra time.

After the sale: redemption, possession and what you could still owe

Alabama lets people redeem a home after a foreclosure sale: within 180 days for residential property with a homestead exemption claimed that tax year, or within one year for all other property. That includes you as the mortgagor, even if you aren't personally liable on the debt, and your spouse on the day of the sale.

For a homestead, the redemption clock doesn't start until the lender gives the required notice, but no one can redeem more than one year after the foreclosure. A missing or defective notice doesn't undo the foreclosure or the transfer of title. Your redemption rights can't be waived in your mortgage or in any agreement made before the foreclosure.

If the buyer makes a written demand for possession and you don't hand over the home within 10 days, you lose your right to redeem.

To redeem, you can ask the buyer in writing for a statement of the debt and charges, and the buyer must give you an itemized one within 10 days. You pay the price paid at the sale, with interest at the rate for money judgments, plus charges such as permanent improvements, taxes, and insurance premiums paid or owed by the buyer. You must offer payment or file suit within 180 days of the foreclosure for a homestead, or within one year for other property.

If you redeem from someone who still owns the debt the home was sold for, you must also pay any balance still due on that debt, with interest.

Ask a lawyer or legal aid whether you could still owe money after the sale, and whether any extra money is owed to you if the sale brought more than the debt.

Protections when you sell, lease or get offers

• If a buyer plans to market its contract to buy your single-family home, it must tell you in writing before it starts marketing. It must also tell you the date of any assignment to a new buyer at least three business days before it takes effect. The written notice applies whether the buyer's interest moves by assignment, novation or a similar method. A buyer who breaks the rule can owe you three times the fee it got. The rule covers only single-family homes.
• A service agreement is unfair if its services aren't performed within a year and it, for example, claims to bind future owners of the home. No one may record one, and an unfair agreement can't be enforced.
• If you sell your interest before the foreclosure sale and you're released from the loan, your right to redeem ends. If you sell but are still liable on the debt on the sale date, you keep your right to redeem.
• A scam may try to get you to sign over title to your home, sometimes called a rent-to-buy scheme, or tell you to stop making your mortgage payments.
• Companies that offer foreclosure help can't charge fees up front. They can charge only after they work out a deal with your lender that you want to accept.

Two of these touch how I buy: the written notice rule for marketing or assigning a contract, which names novation, and the redemption rule for owners who sell but stay on the loan, which fits taking over payments. And don't stop talking to your lender while you weigh any offer, including mine.

Free help in Alabama

• AHFA: homebuyer resources. Points you to HUD-sponsored housing counseling agencies, which can give advice on defaults and foreclosures.
• Alabama Attorney General: consumer complaint. Filing a complaint isn't a legal action, and you may be told to see a private lawyer.
• Alabama Legislature: Code of Alabama. Read the foreclosure and redemption laws for yourself.
• CFPB: find a housing counselor. Search HUD-approved counseling agencies in Alabama.