Hard Financial Times Lead To Foreclosures
In uncertain economic times, it is not uncommon for homeowners to have trouble keeping up with their bills, in particular their mortgage payments. An unexpected layoff or medical bills can easily turn into financial stress and upheaval for even the most conscientious of bill payers. Despite the reasons for why this could happen to begin with, lenders cannot be expected to wait forever for the money owed to them and, unfortunately, foreclosures are the way lenders must choose to proceed to protect their own interests. In general, lenders are aware that sometimes short-term financial issues arise, but most do start the foreclosure process within three to six months of the initial missed payment.
Types Of Foreclosure
All foreclosures are not the same. In fact, there are different types: judicial and power of sale. Each of these different types of foreclosures have specific requirements and processes that must be followed. In Alabama, the most common type of foreclosure is a non-judicial foreclosure. The mortgage instrument itself typically contains a power of sale clause; this clause allows for foreclosure on the property upon default. The property is then auctioned in order for the lender to recoup its money. For lenders to be able to use this method of foreclosure, the legal documents must have the power of sale language and specific notice requirements must be met prior to the auction. Judicial foreclosure is also allowed in Alabama; in this type of foreclosure the lender files a lawsuit in court and the borrower has thirty days after receipt of the mailed notice of the suit to make payment. If payment is not made, the property is auctioned.
Can The Borrower Reclaim The Property?
Alabama law provides for the right of redemption, which allows someone to reclaim their foreclosed property with a payment that covers the full amount of the unpaid loan plus any costs within a year of the sale. In addition to this option, there are other options that may be better for both the lender and borrower, including renegotiating the loan or short sales.
What If The Auction Price Does Not Cover The Unpaid Amount?
In cases where a foreclosed property is auctioned for less than the amount owed to the lender, the lender can obtain a deficiency judgment against the borrower for the remaining amount owed. Due to the complexity of this process, a lender is wise to enlist the assistance of an experienced attorney.
Cloud Willis & Ellis – Your Foreclosure Attorneys
When you are facing the task of initiating a foreclosure, the office of Cloud Willis & Ellis is here to help. As with any legal issue, there are a variety of options for how to proceed; speaking with an experienced attorney prior to taking any action is the best way to ensure you take the course of action that is most beneficial to you. Our Birmingham foreclosure attorneys will explain your options to you and ensure you have all the information you need to make the right choice. Contact Cloud Willis & Ellis to set up a meeting to discuss your options.