Power of Sale
In Alabama, most foreclosures are non-judicial foreclosures--meaning that the majority of mortgages within the state contain a "power of sale" clause that gives the lender permission to sell that home if the homeowner fails to make his loan payments. When this happens, the foreclosure process begins. Some power-of-sale clauses will specify the time, place and terms of the auction and sale of the home. If the clause does not specify these elements, the sale takes place in front of the courthouse.
An Alabama foreclosure begins when a lender fails to receive the homeowner's monthly mortgage payments, prompting the company to try to collect its money by selling the home. Most mortgages stipulate that the lender must first send a "Notice of Default" to the homeowner, which will inform her of the lender's intentions to sell her home. Depending on what the mortgage states, that homeowner will have anywhere from 10 to 30 days to respond to that notice and either work out an alternate payment plan with the lender or make her loan current.
If the homeowner does not respond to the Notice of Default, the lender will publish a Notice of Sale in the region's newspaper, outside the county courthouse and in other public spaces to inform the general public of the impending sale of the home. This notice may also be sent to the homeowner, though this is usually up to the lender's discretion. This notice will appear in the newspaper for 4 consecutive weeks. Once the last Notice of Sale has been published, the lender must wait 30 more days before holding its sale, during which time the homeowner can stop the foreclosure by paying any missed payments. The homeowner can also bid on his own home at the public auction, though at this point he must win it back by being the highest bidder.