Under Alabama mortgage and foreclosure law, which of the following statements is NOT accurate?
Correct Answer
C) A lender may foreclose using a power of sale clause without court involvement if the mortgage document permits it
Option C is NOT accurate. Alabama does not permit non-judicial foreclosure using a power of sale clause, even if such a clause is included in the mortgage document. Alabama law (Code of Alabama §35-10-1 et seq.) requires judicial foreclosure — the lender must file a lawsuit and obtain a court judgment before the property can be sold at foreclosure. A contractual power of sale clause cannot override this statutory requirement.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Foreclosure is the legal process by which a lender takes possession of a property when a borrower fails to make mortgage payments. It allows the lender to sell the property to recover the outstanding debt.
The loan-to-value ratio (LTV) is the percentage of a property's appraised value or purchase price (whichever is lower) that is being financed through a mortgage. LTV = Loan Amount / Property Value.
A comparison of the major mortgage loan types—conventional, FHA, VA, and USDA—covering their eligibility requirements, down payment amounts, mortgage insurance rules, and best use cases.
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