Which statement best describes foreclosure in Alabama?
Correct Answer
B) Alabama allows both judicial foreclosure and non-judicial (power of sale) foreclosure, with non-judicial being common when the mortgage contains a power of sale clause
Alabama is a lien theory state, meaning the mortgagor (borrower) retains title to the property while the mortgage serves as a lien on the property. Under Alabama Code § 35-10-1 et seq., Alabama permits both judicial foreclosure (through court proceedings) and non-judicial foreclosure (power of sale), and non-judicial foreclosure is widely used when the mortgage document includes a power of sale clause. Option C is incorrect because Alabama is a lien theory state, not a title theory state — the lender does not hold title during the loan term.
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Related Topics & Key Terms
Related Topics:
Key Terms:
Related Concepts
An adjustable-rate mortgage (ARM) has an interest rate that changes periodically based on market conditions, typically after an initial fixed-rate period. The rate adjustment is tied to a financial index plus a margin.
Closing costs are the fees and expenses paid by the buyer and seller at the closing of a real estate transaction, beyond the purchase price. They typically range from 2-5% of the purchase price.
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.
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