Foreclosure in Arkansas

How an Arkansas foreclosure works, step by step

1. Generally, the legal foreclosure process can't start until you're at least 120 days behind.
2. At least 10 days before it starts a foreclosure, the lender must send you a packet by standard mail. It includes a true copy of the note with its endorsements, the mortgage or the deed of trust, and information about each loan modification or forbearance program on offer.
3. Next, the lender or trustee records a notice of default and intention to sell with the county recorder where the home is. In conspicuous type, the notice must warn: "YOU MAY LOSE YOUR PROPERTY IF YOU DO NOT TAKE IMMEDIATE ACTION."
4. Within 30 days of recording, the notice must be mailed to you by certified mail and by first-class mail.
5. The notice also runs in a newspaper once a week for four weeks in a row before the sale, with the last run no more than 10 days before the sale. A posting service puts it up at the county courthouse, where foreclosure sales are usually advertised and held.
6. If you applied for a loan modification or forbearance, the sale can't go ahead until the lender confirms you were told you don't qualify. That notice goes to you by certified and first-class mail at least 10 business days before the sale.
7. The sale can't happen until at least 60 days after the notice of default was recorded. It's held between 9:00 a.m. and 4:00 p.m., at the home or at the front door of the county courthouse.
8. Within 10 days, the buyer gets a trustee's or mortgagee's deed. The buyer has the right to immediate possession, and can file a forcible entry and detainer case to get it.

Your right to cure before the sale

Any time after the notice of default is recorded and before the sale, you can pay the lender the entire amount then due under your loan. That includes trustee's and attorney's fees, but not the part of the principal that wouldn't be due if you hadn't defaulted. Then your loan is reinstated and stays in force, as if it had never been called due.

The Attorney General notes that Arkansas law directs servicers to tell you about loss mitigation or loan modification help before the foreclosure. Under federal rules, if your servicer gets a complete application for help more than 37 days before a sale, it has 30 days to act on it. And you have the right to stay in your home during the whole foreclosure process.

Ask for the reinstatement amount in writing, and ask early.

Who can sell, and how the sale runs

The non-judicial process is open only when the lender is a mortgage company, a bank or a savings and loan. It doesn't apply to a mortgage or deed of trust on land used mainly for farming. Every properly acknowledged and recorded mortgage on Arkansas land carries a power of sale, even if the mortgage doesn't spell one out.

The lender or trustee must hire a third party to run the sale as auctioneer. No bid can be accepted for less than two-thirds of the full debt owed on the sale date. The sale can be put off, and no new notice is needed unless it's pushed back more than 30 days past the date in the notice.

Until the deed is delivered, the trustee or lender may set aside the sale by declaring it void.

How long it takes

Foreclosure generally can't legally start until you're at least 120 days behind. Once it starts, how long you have until the sale depends on your state.

For FHA loans, HUD's time frame runs from the first legal action until the lender has clear title to the home and possession of it. In Arkansas, that's 11 months, and the first legal action is recording the notice of sale.

Without a lawsuit, the notices set the pace: the lender's packet at least 10 days before the foreclosure starts, then at least 60 days from recording the notice of default to the sale.

These are official markers, not a forecast. Your case can move faster or slower, so don't count on extra time.

Challenging a sale, deficiency, surplus and redemption

Claims against a statutory foreclosure generally must be raised before the sale, or they're lost for good, with exceptions for you as the borrower. Those exceptions are fraud and the lender's failure to strictly follow the statute. A claim that the lender didn't strictly comply must be brought within 30 days of the sale. If a court sets aside the sale for that reason, you may recover reasonable attorney's fees.

If the sale doesn't cover what you owe, the lender has 12 months after the sale to sue for the balance, called a deficiency. The judgment can't be more than the smaller of two gaps: the debt on the sale date, with interest, costs and trustee's and attorney's fees, minus the home's fair market value, or that same total minus the sale price.

If the sale brings in extra money, later recorded lienholders are paid in order of priority, and any surplus goes to you as the borrower who signed the deed of trust, or to whoever took your place.

A statutory sale ends all rights of redemption, and no one can redeem the home after it. If your lender sues in court instead, ask a lawyer how redemption works in your case.

Offers, rescue scams and your rights

• The Attorney General warns against people who say they can save your home if you sign or transfer your deed to them.
• A red flag: someone urges you to transfer the title to them with a promise that you can buy it back over time or refinance later.
• Another: an offer to buy your house for cash at a fixed price that isn't set by the housing market at the time of sale.
• A company that collects a fee before it has done all the work is a red flag, and in most cases charging that fee breaks Arkansas law. The CFPB says companies that offer mortgage or foreclosure help aren't allowed to collect any fees up front.

Two of these touch how I buy. Taking over payments means you deed the house to me, and a cash offer is a fixed price, so ask how mine compares with what the market would pay. I never charge you anything. And don't stop talking to your lender while you weigh any offer, including mine.

Free help in Arkansas

• Arkansas Attorney General: foreclosure. The Attorney General says to ask a HUD-certified counselor for help, and that help is free.
• Arkansas Attorney General: foreclosure rescue and loan modification scams. Red flags to check before you sign anything.
• Arkansas Attorney General: file a consumer complaint. Report a company you think is running a scam.
• Arkansas Judiciary: self-help resources. It lists Legal Aid of Arkansas, which gives free legal help in civil cases to low-income people in the state.
• CFPB: find a housing counselor. Search HUD-approved counseling agencies in Arkansas.