Foreclosure is the legal process effected through the court system in which a mortgagee (lender—often a bank) terminates a mortgagor’s (borrower’s) interest in the real property in which the mortgagor gave the mortgagee a security interest (a lien) as collateral for the loan used to purchase the property.

Foreclosure generally occurs when a homeowner defaults and fails to make mortgage payments as required by the loan agreement (promissory note).

Foreclosure allows the lender to seize the property, remove the homeowner, and sell the home—all of which are legal remedies the mortgagor and mortgagee agreed to in the mortgage contract.

In Alabama, foreclosure is a legal process that allows a lender to terminate a borrower's interest in a property due to default on mortgage payments. Alabama primarily uses the non-judicial foreclosure process, which means that the foreclosure does not need to go through the court system if the mortgage agreement includes a power of sale clause. This clause allows the lender to sell the property without court supervision after providing proper notice to the borrower. However, if the mortgage does not contain this clause, the lender must pursue judicial foreclosure, involving the court system. The borrower is typically given a chance to pay the overdue amount and reinstate the loan before the foreclosure sale. If the foreclosure proceeds, the property is auctioned to the highest bidder. The proceeds from the sale are used to pay off the mortgage debt, and any surplus is paid to the borrower. If the sale amount is insufficient to cover the debt, the lender may seek a deficiency judgment against the borrower for the remaining amount.