If you own real estate property in Arkansas and have fallen behind on your mortgage payments, your lender has the right to foreclose on your property. Depending on whether your mortgage contract contains a power of sale clause, the lender may initiate foreclosure in or out of court. However, Arkansas law affords you the right to reinstate your mortgage during the foreclosure process.
Right to Reinstate
Under Arkansas law, you can reinstate your mortgage until the date the home is sold. In order to reinstate your mortgage, you must pay your lender all delinquent amounts to bring your mortgage loan current. You must also pay all accrued late fees, as well as all costs the lender has incurred during the foreclosure process, including legal fees, auction expenses and appraisal fees.
Postponement of Sale
In some cases, a weak buying market may work to your advantage as a homeowner trying to avoid losing your home to foreclosure. The trustee in a foreclosure proceeding will not accept any sale bid that is less than two-thirds of the home's appraised value. If no bidder offers more than two-thirds of the appraised value, the sale will be canceled and the lender can initiate a second sale within one year. Although you have no control over whether the sale will take place, a canceled sale may give you additional time to reinstate your mortgage.
Redemption After Sale
Arkansas law also gives homeowners the right of redemption after a successful auction sale has taken place. You can reclaim your property for one year after the foreclosure sale by paying your lender an amount equal to the sale price, plus interest as determined by the lender.
Consideration
If you do not exercise your right to reinstate your mortgage in Arkansas, and the foreclosure trustee accepts a bid for the sale of the home, you are responsible for any deficiency, which is the difference between the sale amount and the balance of your mortgage plus foreclosure costs. However, if the fair market value of the home is greater than the sale amount, the deficiency is limited to the difference between the fair market value and your mortgage balance plus costs. Your lender may sue you to collect a deficiency within one year after the foreclosure sale.
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