A homeowner in Alabama defaults on a mortgage loan. The lender initiates foreclosure proceedings, and the foreclosure sale is completed on March 1, 2025, with the property selling for $180,000. The homeowner wishes to exercise the statutory right of redemption under Alabama law. If the homeowner redeems the property, they must pay the full redemption amount, which includes the $180,000 sale price plus 10% annual interest. How much total interest will have accrued if the homeowner redeems the property exactly one year after the foreclosure sale on March 1, 2026?
Correct Answer
A) $18,000
Under Code of Alabama §6-5-248, a mortgagor has a statutory right of redemption for one year following a foreclosure sale. The redemption price includes the foreclosure sale price plus interest at the legal rate of 10% per annum. Calculation: $180,000 × 10% × 1 year = $180,000 × 0.10 = $18,000. The total interest accrued after exactly one year is $18,000.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A conventional loan is a mortgage that is not insured or guaranteed by a government agency such as the FHA, VA, or USDA. It is originated and funded by private lenders and may be conforming or non-conforming.
The debt-to-income ratio (DTI) compares a borrower's monthly debt obligations to their gross monthly income. It is used by lenders to determine how much mortgage a borrower can afford.
In the context of foreclosure, a deed transfers ownership of the foreclosed property to the new owner, typically the buyer at a foreclosure sale.
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