HB501 Alabama 2013 Session

Summary

Primary Sponsor

Mike Ball

Republican

Session

Regular Session 2013

Title

Mortgage, lender may not seek to recover any differences from sale of foreclosed mortgage

Summary

HB501 would prevent lenders from seeking a deficiency after foreclosure on small residential properties (2.5 acres or less, used for a single one-family or two-family dwelling) for mortgages executed after 12/31/2013.

What This Bill Does

If a foreclosed property is 2.5 acres or less and used for a single family or single two-family dwelling, the lender cannot sue to recover the difference between the sale price and the loan amount plus interest and costs. The prohibition applies only to mortgages executed after December 31, 2013, and does not apply to larger properties or to mortgages made before 2014. This means homeowners in these cases cannot be charged for any shortfall after foreclosure, even if the sale price is less than what was owed.

Who It Affects

• Homeowners with qualifying mortgages on properties of 2.5 acres or less used as a single-family or single two-family dwelling, for loans issued after 12/31/2013 (deficiency claims barred in foreclosures).
• Lenders on those same mortgages (they cannot seek deficiency judgments in foreclosures for qualifying properties and loans).

Key Provisions

• Prohibits a lender from maintaining an action to recover the difference between the sale price of the foreclosed property and the indebtedness plus interest, costs, and expenses for properties of 2.5 acres or less used for a single-family or single two-family dwelling.
• Applies only to mortgages executed after December 31, 2013.
• Effective date: becomes law on the first day of the third month following its passage and approval by the Governor.
• Scope is limited to the described property type and does not apply to larger properties or mortgages executed before 2014.

AI-generated summary using openai/gpt-5-nano on Feb 24, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Mortgages