Facing foreclosure is scary. Most people don’t know what’s coming next or what rights they have. The good news? Arkansas law gives you more protections than you might think.
This guide breaks down how foreclosure works in Arkansas. You’ll learn the timeline, your rights, and what you can do to protect yourself.
What Is Foreclosure?
Foreclosure is the legal process a lender uses to take your home. It happens when you stop making mortgage payments. The lender sells the home to recover the money you owe.
Pretty straightforward, right? But the process has rules. Lenders have to follow specific steps. And you have rights along the way.
Two Types of Foreclosure in Arkansas
Arkansas allows two types of foreclosure. Knowing the difference matters a lot.
The first type is nonjudicial foreclosure. This is the most common one in Arkansas. It happens outside of court. It’s faster and cheaper for the lender. But you still have rights.
The second type is judicial foreclosure. This one goes through the courts. The lender files a lawsuit against you. It takes longer, but it gives you more chances to respond.
In Arkansas, lenders may foreclose using either a judicial or nonjudicial method. Your mortgage documents usually determine which one the lender uses.
The Preforeclosure Period: You Have Time
Okay, this part is important. Missing one payment doesn’t mean you’re losing your home tomorrow.
Federal mortgage servicing laws require the servicer to contact you by phone to discuss foreclosure alternatives no later than 36 days after a missed payment. Those alternatives are called “loss mitigation” options. We’ll talk more about those in a bit.
If you do not catch up within 45 days of missing a payment, you will receive a “Notice of Delinquency.” This notice will state the date you fell behind, tell how much you owe, and contain a loss mitigation application. Fill it out and send it in. Don’t ignore it.
Here’s the big one: under federal law, the servicer usually can’t officially begin a foreclosure until you’re more than 120 days past due on payments. That’s four months. Use that time wisely.
How Nonjudicial Foreclosure Works
Most foreclosures in Arkansas skip the courtroom. Here’s how the process plays out.
Step 1: Preforeclosure Notice
At least ten days before starting an Arkansas foreclosure, the lender has to send the borrower a notice describing the loan modification assistance available, along with a copy of the loan documents and related information.
This is your first official warning. Take it seriously.
Step 2: Notice of Default
The process begins when the bank records a “Notice of Default and Intention to Sell.” This notice, which must be sent to the borrower by certified and regular mail within 30 days of it being recorded, must include the date, time, and place of the sale; a legal description of the property; and the name, address, and phone number of the party bringing the foreclosure.
It also has to include this exact statement: “You may lose your property if you do not take immediate action.” Not subtle. But you need to act fast.
Step 3: The Waiting Period
The bank must record the notice at least 60 days before the sale. That gives you roughly two months after the notice is recorded.
During this time, the lender also has to advertise the sale. A public notice of sale must be published in a newspaper once a week for four weeks, with the first publication being no less than ten days before the sale.
Step 4: The Foreclosure Sale
If nothing stops it, the home goes to auction. 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 doesn’t hit that threshold, the lender can reoffer it within 12 months.
Wondering who can bid? Anyone. The lender can bid. So can third parties. So can you, technically.
How Judicial Foreclosure Works
This one is less common but still used. Here’s the short version.
In judicial foreclosure, a court decrees the amount of the borrower’s 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 advertises the property for sale.
You only have 30 days to file an appropriate answer with the circuit court clerk. If you do not file an answer within 30 days, a default judgment may be entered against you and your home will be sold.
Don’t sit on this. If you get served with a lawsuit, contact an attorney immediately.
Can You Stop a Foreclosure? Yes, Sometimes.
Hold on, this is the part most people miss. You have real options to stop or slow things down.
Option 1: Reinstate Your Loan
This means catching up on everything you owe. Missed payments, fees, late charges. All of it.
Under Arkansas law, the borrower can stop the foreclosure by reinstating the loan at any time after the filing of the notice of default and prior to the sale. Pay what you owe and the foreclosure stops. Simple as that.
Option 2: Loss Mitigation
Loss mitigation is basically working out a deal with your lender. Loss mitigation is a general term for a workout agreement between a borrower and their mortgage servicer to arrange repayment of the debt. Your servicer is required to consider you for loss mitigation.
Options might include a loan modification, a repayment plan, or a short sale. A HUD-approved housing counselor can help you figure out which option fits your situation.
Option 3: File for Bankruptcy
This is a bigger move. But it works fast.
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.
Think of it like hitting a pause button. It buys you time to figure out next steps.
Redemption Rights: A Key Difference
Wait, it gets more complicated here. This part trips people up.
In a judicial foreclosure, you get more time after the sale. The borrower has one year from the date of the sale to redeem the property by paying the amount for which the property was sold, plus interest. That’s a full year to buy it back.
In a nonjudicial foreclosure, it’s different. Arkansas law doesn’t provide a redemption period following a nonjudicial foreclosure. Once that sale happens, it’s done.
This is a big reason why the type of foreclosure matters. Honestly, most people don’t realize this until it’s too late.
Deficiency Judgments: Can They Come After You?
So the home gets sold. But what if it sells for less than what you owe? That leftover amount is called a “deficiency.” And yes, in Arkansas, the lender can come after you for it.
Here’s an example. Say you owe $250,000 on your mortgage. Your home sells at auction for $200,000. You’re now $50,000 short. Arkansas law allows deficiency judgments. Once a lender gets a deficiency judgment, it can use various collection techniques to collect the balance, such as a bank levy or wage garnishment.
That’s no joke. It’s basically a debt collection lawsuit on top of your foreclosure.
In Arkansas, the lender may sue you for a deficiency judgment following a nonjudicial foreclosure if it does so within 12 months after the foreclosure sale. The amount of the judgment is limited to the lesser of your indebtedness minus the property’s fair market value, or your indebtedness minus the sale price.
There’s a cap. But it can still be a lot of money.
What Happens to Your Credit?
A foreclosure is a serious hit to your credit score. It can stay on your credit report for up to seven years. Getting a new mortgage after foreclosure can take several years, depending on the loan type.
This is one more reason to explore every option before the sale happens. The earlier you act, the more choices you have.
What You Should Do Right Now
Not sure what to do first? Let me break it down.
First, don’t ignore any letters from your lender. Arkansas Act 885 of 2011 directs mortgage servicers to provide the names and contact information for any loss mitigation or loan modification services that may be available to you prior to the foreclosure.
Second, stay in your home. It is possible that you will not qualify for assistance if the property has been vacated or deemed abandoned.
Third, contact a HUD-approved housing counselor. They’re free. They help you understand your options and fill out loss mitigation paperwork. Contact HUD at (800) 569-4287 or HUD.gov.
Fourth, talk to a foreclosure attorney. Many offer free consultations. Arkansas Legal Aid offers free help if you qualify. You can reach them at arlawhelp.org.
You’re not alone. This confuses a lot of people. But the sooner you act, the more doors stay open.
Frequently Asked Questions
How long does foreclosure take in Arkansas?
The typical duration for a nonjudicial foreclosure is slightly under three months once it officially begins. But you also have the 120-day preforeclosure period under federal law before it can start.
Can I stop a foreclosure after I get the Notice of Default?
Yes. The borrower can stop the foreclosure by reinstating the loan at any time after the filing of the notice of default and prior to the sale. You need to pay all missed payments and fees in full.
Do I have a right to buy my home back after the sale?
It depends on the type. After a judicial foreclosure, you have one year to redeem it. After a nonjudicial foreclosure, you don’t get a redemption period.
What if my home sells for less than I owe?
If the home is sold for less than the amount you owed on the loan, the bank may sue you for a “deficiency judgment” to cover the difference. This lawsuit must be brought within 12 months of the sale.
Can I get free help with foreclosure in Arkansas?
Yes. Legal Aid of Arkansas provides free legal help to qualifying residents at arlawhelp.org. HUD-approved housing counselors are also available at no cost through HUD.gov or by calling (800) 569-4287.
Final Thoughts
Foreclosure doesn’t have to mean losing everything. Arkansas law gives you time, rights, and real options.
The key is acting early. Don’t wait for the sale date to look for help. Use those 120 days. Call a housing counselor. Talk to a lawyer. Fill out the loss mitigation application.
Now you know the basics. Stay informed, get help early, and remember that one missed payment is not the end of the road.
