Foreclosure Law in Arkansas
In Springdale, Arkansas, foreclosure is a legal process through which an entity which has issued a mortgage takes possession and/or ownership of the property that secured the mortgage, because the person who took out the mortgage has consistently failed to make payments on it. The property in question is usually a house.
Foreclosure most commonly is a forced sale of a house at auction, since those are the most common types of property bought through a mortgage. Banks will normally try to get rid of the property as quickly as they can, selling it for as much money as they can get in a short period of time.
In all states in the U.S., including Arkansas, borrowers have the option of foreclosure by judicial sale. This allows a court to oversee the sale of the property by the bank. The purpose of this is to get the house to sell for the highest price possible. While this might seem like something that would only benefit the bank, it is also a great benefit to the borrower, since it increases the likelihood that the sale will cover the full balance of the mortgage, preventing them from having to pay it.
In many states, mortgages fall into a category of loans recognized as "non-recourse loans." This means that, if the house is sold by the lender, the entire debt is eliminated, even if the sale price was less than the remaining balance on the loan. While the loss of one's home can be personally devastating, treating a mortgage as a non-recourse loan at least means that the homeowner will be more or less free to move on with their life once the property is foreclosed and sold.
How to Possibly Avoid Foreclosure in Springdale, Arkansas
Communication between you and your lender is perhaps the most important way to avoid foreclosure. Ignoring the issue is guaranteed to be counterproductive. Honesty is the best policy when it comes to dealing with lenders.
Throughout all this, you should remember one thing: the bank doesn't really want your house. After all, banks aren't real estate speculators, they're primarily money lenders. They stand to make a great deal of money if you are able to make your mortgage payments until it's paid off. They're likely to make much less if they're forced to sell your house.
If you experience a sudden change in your financial situation, your lender, in an effort to prevent you from defaulting, might be willing to accept lower monthly payments, at least temporarily.
Some buyers in Arkansas, when none of the above options have worked, resort to a "short sale." This contains selling a house which is about to be foreclosed, normally for less than its market value. If the house sells for less than what's left on the mortgage, the homeowner is relieved of the duty to pay the balance. If you have decided that you have no hope of making your mortgage payments, and foreclosure seems inevitable anyway, this might be the way to go.
Can a Springdale, Arkansas real estate attorney help?
If you feel that your home is close to being foreclosed in Springdale, Arkansas, and want to try to prevent this, the advice and assistance of an accomplished real estate lawyer can mean the difference between keeping or losing your home.