In Alabama, you will find that both Judicial and non-judicial foreclosures take place. However it is very rare for the judicial system to intervene in foreclosures. Generally speaking the primary instrument for security is a Deed of Trust, and this is governed by the non-judicial process.
A Deed of Trust in Alabama has to contain a “Power of Sale” clause in order for a non-judicial foreclosure to take place. A power of sale means that a trustee (unbiased) is appointed to manage the Deed of Trust and they are the primary decision maker regarding the foreclosure process.
When a foreclosure takes place in Alabama, because it does not have to pass through the legal system, the process is generally much shorter than it is in states where the judicial foreclosure has to be used. This is a bit of a double edged sword, in that the “Trustee” has to ensure all the correct procedures are followed to protect the home owners’ rights. But also in that it costs less for both the lender and the borrower.
Ultimately the borrower, or home owner who is being foreclosed up, has to meet the cost for legal proceedings. In many instances a lender will also pursue a default judgment, which means the home owner is liable for any costs which are not met by the sale of the property, however these are generally subject to the fair market value of the property.
When a home owner defaults on their mortgage, a notice of default is sent to them and the wheels of foreclosure turn quickly. It generally takes 2 - 3 months for the foreclosure process to be finalized. However the home owner does have rights of redemption for up to a year after the sale of the property has taken place.
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