When is it too late to stop foreclosure in Arkansas?

Anyone with a looming foreclosure asks this question. Foreclosure is a tiresome and draining experience, and like most court cases, you are up against tight legal deadlines. Homeowners often are racing “at the last minute” to stop the bank from re-possessing their home.

Foreclosure has three phases with their own timeline to “stop” foreclosure from proceeding to the “next phase”.

  1. Pre-Foreclosure: “Pre-foreclosure” is the period of time when you are delinquent on mortgage payments but the bank has not yet filed foreclosure lawsuit with the court.
  2. Foreclosure Sale: At the end of the foreclosure case, the property is sold through a public auction called the “foreclosure sale.”
  3. Right of Redemption: Arkansas has a “Statutory Right of Redemption” period to reverse the foreclosure sale.

This blog dives into each of these phases with emphasis on time frames and deadlines you should be aware of to keep the foreclosure of your home going forward.

When is it too late to stop foreclosure in Arkansas?

Time To Stop The Foreclosure Lawsuit

Are you in “pre-foreclosure” and hoping to prevent the bank from initiating a foreclosure lawsuit with the court?

“Pre-foreclosure” starts once you miss a mortgage payment. During pre-foreclosure, the bank has notified you of the delinquency but not yet filed litigation with the courts. Stopping foreclosure litigation before it starts ideal since a public foreclosure case is time-consuming, stressful, and even expensive if you are hiring an attorney.

How long pre-foreclosure lasts in Arkansas varies depending on the situation.

At a minimum, you have a 120-Day “Loss Mitigation Period” before the bank can file a foreclosure lawsuit in accordance with the federal Dodd-Frank Act.

Federal law has created a 120-day “Loss Mitigation Period” from the initial missed payment before the bank can initiate foreclosure procedures. In other words, you have 120-days from your missed payment until the bank can file a foreclosure lawsuit.

You may be able to extend the 120-day period by submitting a “loss mitigation application” to the bank. To apply for loss mitigation, contact your lender and ask to connect with the Loss Mitigation Department. Following submitting the loss mitigation package, lenders must inform you of your eligibility for loss mitigation. The requirements to review your application can “delay” the bank from pressing the litigation forward.

Key Take Away: you have a minimum of 120-days after missing a mortgage payment to prevent the bank from moving you from “pre-foreclosure” to a public foreclosure lawsuit. You can extend this 120-days by submitting a loss mitigation application during the 120-day period.

Time To Stop The Foreclosure Auction

Once the bank files a “Notice of Default” and legal complaint with the court, the foreclosure lawsuit begins to proceed toward a public sale.

There is no “precise amount of time” to stop a foreclosure litigation for concluding – but on average it takes around 180-200 days until the judge approves an auction. However, foreclosure lawsuits can last longer if you “fight the case” and assert available defenses.

Common foreclosure defenses include:

Lack of Standing. Did the bank filing the foreclosure have the legal right to bring case? Is the bank that filed the foreclosure the one that was harmed by failure to make the payments? If not, the standing defense could get the case dismissed.

Inadequate Notice. Mortgages usually require the bank to notify you of default prior to filing for foreclosure. Once the case is filed, banks must give you notice that the case was filed. Were you given sufficient notice?

Unclean Hands. To successfully assert the “unclean hands” defense, you typically need to prove the bank did something to cause you to end up in foreclosure in the first place (i.e. – it wasn’t all your fault). “Unclean conduct” can include fraudulent or illegal activity, acting in bad faith, or unconscionable behavior.

Improper Accounting of Mortgage Payments. Federal and state authorities have specific rules and regulations to properly apply payments and charges to mortgages. If a bank failed to follow accounting laws, you may be able to get the case dismissed.

Failure to Comply with HUD Requirements. Lenders must tell homeowners about loan counseling options available from the U.S. Department of Housing and Urban Development pursuant to the National Housing Act.

Contact an attorney to discuss all your legal options for fighting foreclosure in Arkansas.

Get Your House Back: Right of Redemption

In Arkansas, you can “stop foreclosure” even after the foreclosure auction completes through the “Statutory Right of Redemption”.

The “Statutory Right of Redemption” permits a homeowner to reverse a foreclosure sale after the property was sold at auctionThe homeowner has a specified period of time – typically less than 10-days – in order to pay off the total debt, including the principal balance, plus costs and interest, before the sale in order (or a lesser amount if specified by the foreclosure court).

In other words, you have until the later of the filing of the certificate of sale resulting from the action OR a time frame set out in the court’s order foreclosure to pay to reverse the foreclosure. The amount you must pay is the amount specified in the foreclosure order, and if there is no amount in the foreclosure order, the total amount of indebted.

Ways To Avoid Foreclosure

If your facing foreclosure, consider every option. Homeowners are able to prevent foreclosure (and save their house and credit score) with a proactive mindset.

Options to avoid foreclosure include:

  • “Mortgage Workout” (working with your lender modify the loan to payments you can afford)
  • Selling Before Foreclosure (pay off the mortgage – and get cash in your pocket – with sale proceeds)
  • Deed-in-Lieu of Foreclosure (transfer ownership to the bank)
  • Filing For Bankruptcy (bankruptcy courts issue an “automatic stay” on creditors)
  • Disputing The Foreclosure (assert available legal defenses)
  • Renting the Property (use rental profits to make your monthly payments)
  • Arkansas Mortgage Assistance Programs (financial and counseling help)

Thinking about selling your house to avoid foreclosure? We at 365 Property Buyers can help! Give us a call and we will give you a fair-cash offer within 24 hours. (501)369-0365

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