Foreclosure Prevention Program in Alabama

Need help avoiding foreclosure in Alabama? You might qualify for assistance from the state’s Hardest Hit program.

"Hardest Hit Alabama" is a federally-funded program that offers foreclosure avoidance assistance to eligible homeowners. If you qualify, you might receive money to make your mortgage payments, assist you in getting a loan modification, or to help you sell your home in a short sale.

Keep reading to get an overview of the programs, learn how much assistance is available, and find out if you’re eligible.

Federal Hardest Hit Fund

In 2010, the U.S. Department of the Treasury created the Hardest Hit Fund to provide targeted aid to homeowners in those states most affected by the housing market crash. As part of this program, $7.6 billion in aid was allocated to the 18 states, along with Washington, DC, that experienced the most extreme home price declines and high unemployment rates as a result of the economic crisis. (To learn more about the Hardest Hit Fund in general, including which states have Hardest Hit programs, see Save Your Home From Foreclosure: Hardest Hit Fund Programs.)

Alabama received $162 million in funds and set up the Hardest Hit Alabama program to help eligible homeowners avoid foreclosure. (Learn about the Alabama foreclosure process.)

The program is scheduled to continue through 2020, though other states have shuttered their programs early when funding ran out so it's best to apply for help as soon as possible.

Hardest Hit Alabama: Three Programs to Help Homeowners

The Hardest Hit Alabama program offers three types of assistance to homeowners who're facing a foreclosure:

  • Mortgage payment assistance. In this program, eligible homeowners may receive monthly mortgage payment assistance, as well as an initial amount of up to $12,500 to pay past-due amounts and reinstate the mortgage loan.
  • Loan modification assistance. This program provides a one-time distribution of funds to assist the homeowner in getting a loan modification or recast (re-amortization). Funds go towards reducing the outstanding principal balance, paying delinquent escrow or past-due payments, or recasting the loan.
  • Short sale assistance. This program helps eligible homeowners sell their primary residence through a short sale. The program covers closing costs and any remaining principal amount—up to 10% of the sales price, but no more than $30,000.

The maximum amount of assistance per program is $30,000, though homeowners may participate in more than one program (limited to one component per program for a maximum total assistance amount of $60,000).

Who’s Eligible for Assistance?

Here are the basic eligibility requirements for each program.

Mortgage Payment Assistance Program

To qualify for the mortgage payment assistance program, you have to currently receive—or have previously received—unemployment compensation benefits or experienced a substantial reduction in your household income.

Unemployed homeowners. Homeowners who’ve received unemployment benefits on or after January 2013 might qualify for assistance.

Underemployed homeowners. Underemployed homeowners have to show a financial hardship resulted in a 15% or greater reduction in total household income within the past 24 months.

Loan Modification and Short Sale Programs

The loan modification and short sale assistance programs are open to all homeowners, if they meet all other criteria.

Where to Get Eligibility Details

For specific details about qualifying for assistance, go to the Hardest Hit Alabama website.

Program Exclusions

Certain homeowners and types of property are ineligible for assistance from Hardest Hit Alabama, including:

  • homeowners who have an active bankruptcy
  • homeowners who have been convicted for mortgage-related felonies
  • homeowners with rental property
  • seller-financed properties, and
  • second homes.

Manufactured homes are eligible for assistance if both the manufactured home and the land that it sits upon are mortgaged together as real property. (Learn more about what happens if you're struggling to pay your mortgage on a manufactured home.)

Mortgage Servicer Participation

To receive assistance, your servicer has to participate in the Hardest Hit Alabama program. (A mortgage servicer is the company that collects monthly mortgage payments from borrowers on behalf of the owner of the loan, as well as tracks account balances, manages the escrow account, handles loss mitigation applications, and pursues foreclosure in the case of defaulted loans. Learn more about how mortgage servicing works.)

Mortgage servicer participation in this program is voluntary. (To find out if your servicer is part of the program, go to the “Resources” page on the Hardest Hit Alabama website.)

Beware of Scams

The Hardest Hit Alabama program is free and you should not pay for any services associated with applying for assistance.

Homeowners facing a foreclosure should also be on the look out for other scams as well. Signs of a potential scam include:

  • anyone who asks for an upfront fee to help you modify, refinance, or reinstate your loan
  • anyone who guarantees they can prevent a foreclosure
  • anyone who tells you to stop making your mortgage payments and pay them instead, and
  • anyone who asks you to provide personal information online or over the phone. (If you give out information, like your Social Security number, you could become the victim of identity theft. To learn what to do if your identity has been stolen, see Stolen Identity? Take These Recovery Steps.)

Getting Help

For more information about the program—or to apply for assistance—go to the Hardest Hit Alabama website. You can also send an email to [email protected] or call 877-497-8182.

If you need more information about how foreclosure works in Alabama or want to learn about possible defenses to a foreclosure in your situation, consider talking to a foreclosure attorney. If you want to learn more about alternatives to foreclosure, like a modification or short sale, consider talking to a HUD-approved housing counselor.

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