Quick Facts

–  Judicial Foreclosure Available: Yes

–  Non-Judicial Foreclosure Available: Yes

–  Primary Security Instruments: Deed of Trust, Mortgage

–  Timeline: Typically 120 days

–  Right of Redemption: Varies

–  Deficiency Judgments Allowed: Varies

In Arkansas, lenders may foreclose on deeds of trusts or mortgages  in default using either a judicial or non-judicial foreclosure process. However,  an appraisal of the property must be made prior to the schedule date of foreclosure.

In any foreclosure under a mortgage or deed of trust in Arkansas,  the property must sell for not less than two-thirds of the appraised value. If it  does not, then it may be offered for sale again within twelve (12) months. The second  sale may be to the highest bidder without reference to the previous appraisal.

Judicial Foreclosure

In judicial foreclosure, a court decrees the amount of the borrowers  debt and gives him or her a short time to pay. If the borrower fails to pay within  that time, then the clerk of the court, as commissioner, advertises the property  for sale.

Sales of real property under court order will be on a credit of  not less than three (3) months, but not more than six (6) months, or on installments  to not more than four (4) months credit overall. To secure payment, a lien will  be retained on the property for its price and the purchaser must also give a bond  with surety for the amount of the purchase price.

The lender may bid at the sale by crediting a portion (or all)  of the amount the court found was owed to the lender against the sales price of  the property purchased at the foreclosure sale. If the real estate does not sell  for an amount equal to what�s due on the mortgage loan, then the lender may seize  other property from the borrower as in an ordinary judgment.

The borrower has one (1) year from the date of the sale to redeem  the property by paying the amount for which the property was sold, plus interest.

Non-Judicial Foreclosure

The non-judicial process of foreclosure is used when a power of  sale clause exists in a mortgage or deed of trust. A “power of sale” clause is the  clause in a deed of trust or mortgage, in which the borrower pre-authorizes the  sale of property to pay off the balance on a loan in the event of the their default.  In deeds of trust or mortgages where a power of sale exists, the power given to  the lender to sell the property may be executed by the lender or their representative,  typically referred to as the trustee. Regulations for this type of foreclosure process  are outlined below in the “Power of Sale Foreclosure Guidelines”.

Power of Sale Foreclosure Guidelines

If the deed of trust or mortgage contains a power of sale clause  and specifies the time, place and terms of sale, then the specified procedure must  be followed. Otherwise, the non-judicial power of sale foreclosure is carried out  as follows:

The trustee must record a notice of sale in the office of the  recorder of the county where the property is located. The mortgagee’s or trustee’s  notice of default and intention to sell shall be mailed within thirty (30) days  of the recording of the notice by certified mail to the borrower. This includes  any borrower of record or of whom the lender has actual notice. The notice must  also be mailed to anyone who records a Request for Notice that specifically described  the mortgagee including its recording information.

Within five (5) days after the notice is recorded, the trustee  must mail, by certified mail, a copy of the notice of sale to each of the people  who are parties to the trust deed, except for himself. Additionally, the notice  of default and intention to sell must appear in a newspaper in the county where  the property is located once a week for four (4) consecutive weeks, with the last  notice being published not less than ten (10) days prior to the date of the sale.

Said notice of default and intention to sell must contain the  names of the parties to the mortgage or deed of trust, a legal description of the  trust property and, if applicable, the street address of the property, the book  and page numbers where the mortgage or deed of trust is recorded or the recorder’s  document number, the default for which foreclosure is made, the mortgagee’s or trustee’s  intention to sell the trust property to satisfy the obligation, including, in conspicuous  type, a warning as follows: “YOU MAY LOSE YOUR PROPERTY IF YOU DO NOT TAKE IMMEDIATE  ACTION” and the time, date, and place of sale.

Any person including the mortgagee (lender) may bid at the sale,  except the trustee, who may bid on the behalf of the beneficiary (lender) but not  for himself or herself in deed of trust sales. The high bidder must pay the price  bid at the time of sale, or within ten (10) days. The lender may bid by canceling  out what it is owed on the loan, including unpaid taxes, insurance, costs or sale  and maintenance, but for cash for any higher price.

The trustee may postpone the sale by public proclamation at the  time, place and date last appointed for sale, up to seven (7) days past the original  date, but if for a longer time, then the whole notice procedure must be performed  a second time, including the sixty (60) day wait.

Once the sale is complete, the proceeds will go to the pay for  the expenses of the foreclosure sale, then toward the obligations secured by the  trust deed that was foreclosed and then to junior lien holders in order of their  priority. The original borrower is entitled to receive any remaining funds. The  successful bidder receives a trustee�s deed.

The lender may sue the borrower for a deficiency within twelve  (12) months of a power of sale clause foreclosure. The lender may sue for (1) the  difference between the foreclosure sale price and the balance due on the loan, or  (2) the balance due on the loan minus the fair market value of the property, whichever  is less.

More  information on Arkansas foreclosure laws

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