Alabama Foreclosure Prevention Efforts

For 2009, Alabama ranked 30th among all states in foreclosure rate, an increase of 156.26% from the year before. Nationally, 2009 was the worse year for foreclosures in US history, with 2.8 million property owners receiving a foreclosure notice.

In Alabama, most foreclosures are non judicial. Few foreclosures make it into the courts unless there is a problem with clear title or the mortgage lacks a power of sale clause giving the lender the right to take back the property.

Borrowers can stop the foreclosure at any time until the day of the foreclosure sale, unless this right is specifically prohibited by the mortgage document.

Notice of a pending foreclosure must either be published for three weeks in a local newspaper or posted on the courthouse door where the auction is to be held and three other public places specifying the description of the property, the day place and terms of the sale. Notice is usually sent to the borrower, although this notification is only mandatory if written into the mortgage. Second lien holders are typically informed as well.

After the auction and full payment, the deed is signed over to the top bidder, yet the borrower can redeem the property for up to a year after the sale.
In Alabama, deficiency judgments are allowed.

New 2009 Legislation:  

• Established the Alabama Residential Mortgage Fraud Act to prohibit misstatements or misrepresentation.
• Amended the Mortgage Brokers Licensing Act to allow for background checks

An emergency regulation was established to provide greater oversight regarding loan modification companies.

Local efforts in foreclosure prevention center on the State of Alabama’s Banking Department.  The Department urges distressed borrowers to take the following steps:

• Call your lender now. The further you get behind the fewer options are available.
• Contact the Hope Now Alliance, www.HopeNow.com, a coalition of mortgage market participants, counseling agencies, and the US Department of Housing and Urban Development or call toll free at 1 (888) 995-HOPE
• Dial 211. The Alabama Foreclosure Prevention Collaboration, along with the United Way and the Department of Housing and Urban Development, have established a 211 line for mortgage loss mitigation and foreclosure assistance. For referrals in most of the state simply dial 211.

Alabama offers free legal advice to mortgage borrowers through the Alabama State Bar Association. The Legal Services Alabama Foreclosure Hotline can be reached at 1 (877) 393-2333.

The U.S. Department of Housing and Urban Development announced $446,128 in housing counseling grants awarded to approved agencies in the state of Alabama. Click here for a list of HUD approved mortgage couseling agencies in the state.