If you’re an Arkansas homeowner and are behind in your mortgage payments, it's a good idea to learn about how a foreclosure works and find out your rights. To learn about each step in an Arkansas foreclosure and get information about both federal laws and state laws that protect you during the process, read on.
In most cases, federal law prohibits the servicer (on behalf of the loan owner) from beginning a foreclosure until the borrower is over 120 days delinquent on the loan. (12 C.F.R. § 1024.41). (To learn more about the federal law that delays the beginning of a foreclosure for 120 days, see How Soon Can Foreclosure Begin?)
Also, federal law generally requires servicers to work with borrowers who are having trouble making their monthly payments in a "loss mitigation" process to try to avoid a foreclosure. (12 C.F.R. § 1024.41).
In Arkansas, most residential foreclosures are nonjudicial, which means the foreclosure happens without court supervision. Here’s how the process works:
At least ten days before starting a foreclosure, the foreclosing party must mail a notice to the borrower that includes information about the loan including:
The foreclosing party 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 the borrower within 30 days after recording the notice. (Ark. Code Ann. § 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 Ann. § 18-50-105).
Under Arkansas law, the borrower gets the right to reinstate the mortgage before the sale happens. (Ark. Code Ann. § 18-50-114).
Some states have a law that allows a foreclosed homeowner to “redeem” (buy back) the home after the foreclosure sale. Arkansas, however, doesn’t provide a right of redemption after a nonjudicial foreclosure. (If you think you will lose your home to foreclosure, read When Do You Have to Leave Your Home When It’s in Foreclosure?)
If the total mortgage debt is more than the foreclosure sale price, the difference is called a “deficiency.” Some states allow the lender to get a personal judgment (called a “deficiency judgment”) against the borrower for this amount.
In Arkansas, the foreclosing party may file a lawsuit to get a deficiency judgment after a nonjudicial foreclosure. The amount of the judgment will be:
The lawsuit for a deficiency judgment must be filed within 12 months after the sale. (Ark. Code Ann. § 18-50-112).
While federal and state laws establish a structured foreclosure process, mistakes in foreclosures are common. If you think your lender or servicer has violated the law or you want to find out about different ways to fight a foreclosure, consider contacting a local foreclosure attorney. It’s also wise to contact a HUD-approved housing counselor if you want to learn about different loss mitigation options.