Sandra is a real estate agent in Mobile who recently helped a client purchase a home using a conventional mortgage. Her client asks whether the lender could have used a deed of trust instead of a mortgage as the security instrument. How should Sandra correctly advise her client regarding Alabama law?
Correct Answer
B) No, Alabama primarily uses mortgages as the security instrument, and the borrower retains title rather than conveying it to a trustee
Alabama is a mortgage state, not a deed-of-trust state. The standard security instrument used in Alabama residential lending is the mortgage, under which the borrower (mortgagor) retains legal title and the lender (mortgagee) holds a lien on the property. Alabama does not use the three-party deed-of-trust arrangement (borrower, trustee, lender) that is common in states like Virginia or California. Foreclosure in Alabama proceeds judicially, consistent with the mortgage framework.
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