A lender in Montgomery is considering whether to initiate foreclosure on a defaulting borrower's residential property. The borrower has missed six consecutive mortgage payments. Under Alabama law, which step must the lender complete FIRST before the property can be sold at a foreclosure sale?
Correct Answer
C) Send a certified letter to the borrower invoking the power of sale clause in the mortgage
Because Alabama is a judicial foreclosure state under Code of Alabama §35-10-1 et seq., the lender must file a foreclosure lawsuit in the appropriate circuit court and obtain a court judgment authorizing the sale before any foreclosure sale can take place. The court process ensures judicial oversight and protects the borrower's due process rights. This is a mandatory step that cannot be bypassed in Alabama.
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Related Topics & Key Terms
Key Terms:
Related Concepts
In the context of foreclosure, a deed transfers ownership of the foreclosed property to the new owner, typically the buyer at a foreclosure sale.
Discount points are upfront fees paid to a lender at closing to reduce (buy down) the interest rate on a mortgage loan. One point equals 1% of the loan amount and typically reduces the rate by approximately 0.25%.
An FHA loan is a mortgage insured by the Federal Housing Administration that allows lower down payments and credit scores than conventional loans. It is designed to help first-time homebuyers and borrowers with limited resources.
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