Arkansas Foreclosure Laws and Procedures

Learn about Arkansas foreclosure laws and how the Arkansas foreclosure process works.

By , Attorney (University of Denver Sturm College of Law)

Before the foreclosure crisis, federal and state laws regulating mortgage servicers and foreclosure procedures were relatively limited and tended to favor foreclosing lenders. However, many federal and state laws now give protections to borrowers. Servicers generally must provide borrowers with loss mitigation opportunities, account for each foreclosure step, and carefully comply with foreclosure laws.

Also, most people who take out a loan to buy a residential property in Arkansas sign a promissory note and a mortgage. These documents usually give homeowners certain contractual rights after a home loan default.

So, don't get caught off guard if you're a homeowner behind in mortgage payments. Learn about foreclosure laws in Arkansas and how the foreclosure process in Arkansas works, from missing your first payment to a foreclosure sale.

What Are My Rights During Foreclosure in Arkansas?

In an Arkansas foreclosure, you'll most likely get the right to:

  • get a preforeclosure notice
  • apply for loss mitigation
  • receive notice of the foreclosure
  • receive special protections if you're in the military
  • stop the foreclosure by paying off the overdue payments and bringing the loan current
  • pay off the loan to prevent a sale
  • file for bankruptcy, and
  • get any excess money after a foreclosure sale.

Once you understand the Arkansas foreclosure process and your rights, you can make the most of your situation and, hopefully, work out a way to save your home or at least get through the process with as little anxiety as possible.

What Is Preforeclosure?

The period after you fall behind in payments, but before a foreclosure officially starts, is generally called the "preforeclosure" stage. (Sometimes, people refer to the period before a foreclosure sale happens as "preforeclosure," too.)

During the preforeclosure period, the servicer can charge you various fees. Also, in most cases, federal law requires the servicer to let you know how to avoid foreclosure, and most mortgage contracts require the servicer to send you a breach letter.

When Can an Arkansas Foreclosure Start?

Under federal law, the servicer usually can't officially begin a foreclosure until you're more than 120 days past due on payments, subject to a couple of exceptions. (12 C.F.R. § 1024.41). This 120-day period provides most homeowners ample opportunity to submit a loss mitigation application to the servicer.

What Type of Foreclosure Is Permitted in Arkansas?

If you default on your mortgage payments in Arkansas, the lender may foreclose using a judicial or nonjudicial method.

How Judicial Foreclosures Work

A judicial foreclosure begins when the lender files a lawsuit asking a court for an order allowing a foreclosure sale. If you don't respond with a written answer, the lender will automatically win the case.

But if you choose to defend the foreclosure lawsuit, the court will review the evidence and determine the winner. If the lender wins, the judge will enter a judgment and order your home sold.

How Nonjudicial Foreclosures Work

If the lender chooses a nonjudicial foreclosure, it must complete the out-of-court procedures described in the state statutes. After completing the required steps, the lender can sell the home at a foreclosure sale.

Most lenders use the nonjudicial process because it's quicker and cheaper than litigating the matter in court.

What Is the Nonjudicial Foreclosure Process in Arkansas?

Again, most residential foreclosures in Arkansas are nonjudicial.

Notice Before Foreclosure Officially Begins

At least ten days before starting a foreclosure, the foreclosing lender must mail a notice to the borrower that includes information about the loan, including:

  • a true and correct copy of the note with all required endorsements (or state that the document is lost or otherwise unavailable)
  • the name of the holder and the physical location of the original note
  • a true and correct copy of the original mortgage or deed of trust and, if in its possession, each assignment or allonge of the mortgage or deed of trust (or state that the document is lost or otherwise unavailable)
  • information about available loan modification programs or forbearance assistance offered, and
  • if the default is the result of the failure to make payments, a payment history showing the date of default. (Ark. Code § 18-50-103).

Notice About the Foreclosure

The lender must record a notice of default and intent to sell at least 60 days before the sale and mail a copy by certified and first-class mail to you (the borrower) within 30 days after recording the notice. (Ark. Code § 18-50-104).

Notice about the foreclosure also has to appear in a newspaper consecutively for four weeks before the sale, be posted at the courthouse, and be published on the internet. (Ark. Code § 18-50-105).

How Do Foreclosure Sales in Arkansas Work?

The sale will be held on the date and at the time and place designated in the notice of default and intention to sell, except that the sale must:

  • be held between 9:00 a.m. and 4:00 p.m.
  • be held either at the premises of the property or at the front door of the county courthouse of the county in which the property is situated and
  • not be held on a Saturday, Sunday, or a legal holiday. (Ark. Code § 18-50-107).

At the sale, the lender usually makes a credit bid. The lender can bid up to the total amount owed, including fees and costs, or it may bid less. In some states, including Arkansas, when the lender is the high bidder at the sale but bids less than the total debt, it can get a deficiency judgment against the borrower (see below).

If the lender is the highest bidder, the property becomes "Real Estate Owned" (REO). But if a bidder, say a third party, is the highest bidder and offers more than you owe, and the sale results in excess proceeds (money over and above what's needed to pay off all the liens on your property), you're entitled to that surplus money.

How Long After a Foreclosure Sale Do I Have to Move Out in Arkansas?

Within ten days after the sale, the mortgagee (lender) or trustee must execute and deliver the trustee's deed or mortgagee's deed to the purchaser. The purchaser at the sale shall be entitled to immediate possession of the property. (Ark. Code § 18-50-107).

If you don't move out, the purchaser can get possession by filing a complaint in the circuit court of the county in which the property is situated and attaching a copy of the recorded trustee's or mortgagee's deed. The purchaser is then entitled to an ex parte writ of assistance. Or the purchaser may bring an action for forcible entry and detainer (eviction) against you. (Ark. Code § 18-50-107).

You should probably plan on leaving as soon as possible after the foreclosure sale, within ten days of it. However, the purchaser might be willing to work with you to give you additional time to live in the home or offer you a cash-for-keys deal. So, contact the purchaser if you want to pursue either of these options.

What Are the Options Available for Borrowers During Foreclosure in Arkansas?

A few potential ways to stop a foreclosure and keep your home include reinstating the loan, redeeming the property before the sale, or filing for bankruptcy. Working out a loss mitigation option, like a loan modification, will also stop a foreclosure.

Or you might be able to work out a short sale or deed in lieu of foreclosure and avoid foreclosure. (But you'll have to give up your home with a short sale or deed in lieu of foreclosure transaction.)

Reinstating the Loan

Under Arkansas law, the borrower gets the right to reinstate the mortgage before the sale happens. (Ark. Code § 18-50-114).

Does Arkansas Have a Right of Redemption for Foreclosure?

One way to stop a foreclosure is by "redeeming" the property. To redeem, you have to pay off the full amount of the loan before the foreclosure sale.

Some states also provide foreclosed borrowers a redemption period after the foreclosure sale, during which they can buy back the home. However, Arkansas law doesn't provide a redemption period following a nonjudicial foreclosure. (Ark. Code § 18-50-116(d)(1)).

Filing for Bankruptcy

If you're facing a foreclosure, filing for bankruptcy might help. In fact, if a foreclosure sale is scheduled to occur in the next day or so, the best way to stop the sale immediately is by filing for bankruptcy.

Once you file for bankruptcy, something called an "automatic stay" goes into effect. The stay functions as an injunction, which prohibits the lender from foreclosing on your home or otherwise trying to collect its debt, at least temporarily.

In many cases, filing for Chapter 7 bankruptcy can delay the foreclosure by a matter of months. Or, if you want to save your home, filing for Chapter 13 bankruptcy might be the answer. To find out the options available, speak with a local bankruptcy attorney.

Foreclosure Protections and Military Servicemembers

The federal Servicemembers Civil Relief Act (SCRA) provides legal protections to military personnel facing foreclosure.

Also, under Arkansas law, the lender may not foreclose on a military servicemember for nonpayment or any breach occurring during military service without a court order if the following conditions are met:

  • The relief is sought on an obligation secured by a mortgage, trust deed, or other security in the nature of a mortgage on either real or personal property.
  • The obligation originated before the servicemember entered military service.
  • The property was owned by the servicemember or their dependent before military service began.
  • The servicemember (or their dependent) still owns the property when relief is sought.

This state law applies to National Guard members called into active service by the governor for more than 180 days. (Ark. Code § 12-62-716).

Also, under state law, a court overseeing a foreclosure, upon application, unless the court finds on the record that the servicemember's ability to comply with the terms of the mortgage isn't materially affected by reason that person's military service, may:

  • order repayment of any prior installments or deposits as a condition of terminating the contract and resuming possession of the property
  • order a stay of the proceedings on its own motion or on motion by the servicemember or another person on the servicemember's behalf or
  • make any other disposition of the case as it considers to be equitable to conserve the interests of all parties. (Ark. Code § 12-62-716).

Are Deficiency Judgments Allowed in Arkansas?

In a foreclosure, the borrower's total mortgage debt sometimes exceeds the foreclosure sale price. The difference between the total debt and the sale price is called a "deficiency." For example, say the total debt owed is $400,000, but the home sells for $350,000 at the foreclosure sale. The deficiency is $50,000.

In some states, the lender can seek a personal judgment against the debtor to recover the deficiency. Generally, once the lender gets a deficiency judgment, the lender may collect this amount from the borrower.

Arkansas law allows deficiency judgments, subject to some limitations.

Arkansas Deficiency Judgment Laws

In Arkansas, the lender may file a lawsuit for a deficiency judgment after a nonjudicial foreclosure. The amount of the judgment will be the lesser of:

  • the total debt minus the fair market value of the property or
  • the total debt minus the foreclosure sale price. (Ark. Code § 18-50-112). (Bids for less than two-thirds of the entire indebtedness can't be accepted at the sale.) (Ark. Code § 18-50-107).

The lawsuit for a deficiency judgment must be filed within 12 months after the sale. (Ark. Code § 18-50-112).

What Are the Potential Consequences of Foreclosure?

A foreclosure could result in serious consequences, like lower credit scores, a deficiency judgment (as mentioned), or tax ramifications.

More Foreclosure Information

For more information on federal mortgage servicing laws, as well as foreclosure relief options, go to the Consumer Financial Protection Bureau (CFPB) website.

Read More Articles

Get tips on what to do—and what not to do—if you're facing a foreclosure.

Find out if foreclosures are on the rise.

Getting Help

If you have questions about Arkansas's foreclosure process or want to learn about potential defenses to a foreclosure and possibly fight the foreclosure in court, consider talking to a foreclosure attorney.

It's also a good idea to talk to a HUD-approved housing counselor about different loss mitigation options.

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