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Home Mortgage Rates in Alabama

Alabama is one of the fastest growing states in the country. As a result, Alabama's home loan industry is starting to see an upward trend in home loan applications. This should help an industry that features the normal selection of home loan products.

These home loan products are protected by a number of foreclosure procedures that generally benefit the lender. However, borrowers still have many privileges that are rarely seen elsewhere in the country. As a result, anyone who is interested in purchasing a foreclosed home in Alabama should learn how the foreclosure process works in Alabama.

Alabama Real Estate Trends

Here is some background information about Alabama's median home values, population trends and mortgage industry that can help readers learn more about the foreclosure process in Alabama.

Alabama's median home values tend to be significantly lower than the February 2010 national median home price of $190,000. To see why this is true, here are the February 2010 median home values for single-family homes in three of Alabama's well-known cities:

  1. Mobile ($154,900).
  2. Birmingham ($149,000).
  3. Montgomery ($139,900).

There are two reasons why Alabama's median home values tend to be much lower than the national median home price:

  1. There is heavy price competition that is forcing home values down. This is the case because higher than average home inventories are forcing sellers to lower their prices on their properties. This is especially true for prices that sell for $150,000-$200,000.
  2. Furthermore, Alabama's low per capita income has also depressed home values. Alabama's per capita personal income has hovered around $26,000 for the past several years.
    This has kept pace with the 2006 national mean per capita income of $26,036. However, this lower per capita income has depressed home values because it has forced home buyers in Alabama to be more price- conscious. As a result, one can reasonably surmise that this increase in the income elasticity of demand for homes has driven down home values in Alabama.

Popular Alabama Cities


Birmingham-Hoover (1,117,608):
Birmingham has seen an increase in its per capita income. This is the case because the publishing, biotech and health care industries have made huge investments in the area. Furthermore, residents also enjoy a lower cost of living and lower taxes.

Mobile (404,406):
Mobile's economy is diverse. It features many employers who conduct business in the aerospace, retail, construction, manufacturing and shipping industries. However, Mobile also has one of the highest poverty rates in the nation at 17.6%. This statistic has kept home values down and Mobile very vulnerable to foreclosures. (Source:

Montgomery (201,998):
As the state capital, Montgomery maintains a diversified economy that is heavily reliant upon government spending. Furthermore, the military’s presence at Maxwell-Gunter Air force Base and university-level research projects give the city one of the highest per capita incomes in the state.

Fastest Growing Cities

Alabaster (25,000):
Alabaster is a suburb of Birmingham. It has seen amazing growth over the last decade because it enjoys one of the lowest tax rates in the nation. Furthermore, its great quality of life and wide open spaces has become just the thing for Birmingham residents who want to take live in a more relaxed setting. (Source:

Pelham (20,625):
Pelham has grown steadily over the past five years because it has developed its travel and tourism industry that takes advantage of its open spaces and proximity to famous golf courses. Furthermore, Pelham has also seen many retirees flock to the area. This true because the city enjoys a very low crime rate, clean air and a very low cost of living. (Source:

Mobile (406,309):
Mobile's manufacturing and shipping industries have seen new life as foreign investors have flocked to take advantage of the area's port and shipping lanes. This has attracted many new residents to the area who wish to take advantage of the new job opportunities that have opened up as a result.

Alabama Mortgage Types

Alabama offers the usual range of home loan products, including:

  1. Fixed rate mortgages that mature in 15, 20 or 30 years
  2. ARM's that mature in 1, 3 or 5 years
  3. Refinance loans
  4. Second mortgages
  5. FHA and VA fixed rate loans
  6. Jumbo loans.

These loan products are recognized as being either mortgages or deeds of trust. However, for practical purposes, one can interchange the name of the loan product without having to worry about its legal ramifications. In addition, most modern mortgages have a Power of Sale clause that makes foreclosing on a property easier. Furthermore, most mortgages in Alabama have full recourse privileges.

However, borrowers who have defaulted on their mortgages have up to one year to attempt to redeem their homes. This potentially lengthy redemption period makes obtaining a deficiency judgment difficult. It also makes the foreclosure process somewhat more difficult to execute in Alabama.

Alabama's Foreclosure Processes

Alabama recognizes both judicial and non-judicial foreclosure processes. However, as a general rule, most foreclosures in Alabama use non-judicial foreclosure procedures. This is the case because most modern mortgage instruments issued in Alabama contain a Power of Sale clause that makes it easier to foreclose on a defaulted property.

Here is a brief overview of how each procedure works in Alabama:

Here is how the judicial foreclosure procedure works in Alabama:

The judicial foreclosure procedure works in Alabama only if there is no verifiable "Power of Sale" clause in the original loan provisions. If this is the case, here are the steps that the lender must go through to use the judicial foreclosure procedure:

  1. First, the lender must go to the county where the home resides to obtain a formal right to foreclose.
  2. If the judge agrees that the borrower is unable to make good on the mortgage, the judge will allow the lender to begin the foreclosure proceedings.
  3. The foreclosure proceedings start by having the lender record a "lis pendens" document at the county clerk's office. This document declares to the public that the property is being foreclosed upon.
  4. Once this document is recorded, the borrower could receive a written notice within 10-30 days that his property is about to be foreclosed upon. Since this is not required by state law, some lenders skip this step.
  5. Once the lis pendens document has been officially certified in the county clerk's office, the sale may be conducted in much the same manner as if were foreclosed in a non-judicial procedure.
  6. However, if the borrower contests the sale, the court may give the borrower up until the day of the sale to redeem the property unless the original terms of the mortgage clearly state that no such period be granted to the borrower.
  7. In order to redeem the property, the borrower must pay the full amount of the loan plus any interest and costs that were associated with putting the home up for sale.
  8. Once the redemption period ends, the property is then sold in much the same manner as if it were being sold during a non-judicial foreclosure.
  9. Furthermore, the lender may opt out of the judicial foreclosure process at any time after obtaining final permission from the court by simply selling the home as if the lender were going through the non-judicial foreclosure procedure.
  10. Here is how that process works:
    • The lender must first publish a formal notice of the sale in a newspaper that is published in the county where the home is located.
    • The notice must be published at least once for at least 4 consecutive weeks.
    • The notice must provide:
      1. The time and place of the sale.
      2. A valid description of the property.
      3. And the reason why the home is up for sale.
    • Once this condition has been met, the sale takes place at the county courthouse with the county sheriff leading the proceedings.
    • The sale usually takes place from 11 AM to 4 PM.
    • A bidder may bid as low as $1.00 on the property.
    • There is no reserve price. As a result, the highest bidder wins the right to purchase the home for whatever amount of the final bid.
    • Furthermore, Alabama state law does not restrict who can bid at these sales. As a result, the borrower and the lender could technically bid at the sale.
    • The winner of the auction receives the property upon receipt of cash or a cash equivalent.
    • If the borrower is not the winner of the auction, he has one year to redeem the property.
    • During this time, the lender may sue the borrower for a deficiency judgment if the final auction price is less than what is owed on the note.

Here is how the non-judicial foreclosure procedure works in Alabama:

  1. First, the lender must go to the county court to see if there is valid Power of Sale clause in the loan's original language.
  2. If there is such language, the lender may go ahead and sale the house using one of two procedures:
    • If the loan's provisions include a procedure for selling the home, those provisions will govern how the sale of the home is conducted.
    • If there is no such language in the original loan's provisions, the procedure that was outlined above for a judicial sale is used with a few minor modifications.

Here are those few modifications:

  1. The lender must publish a notice of foreclosure sale date for only three weeks in a newspaper that is published in the same county where the home resides.
  2. The sheriff who conducts the sale may move the date of the sale as he sees fit. Otherwise, the procedure that was outlined above is used throughout the sale of the home.