Under the Arkansas Deeds of Trust Act, what is the role of the trustee in a deed of trust transaction?
Correct Answer
D) The trustee is a neutral third party who holds legal title to the property on behalf of the beneficiary
Under Ark. Code Ann. § 18-50-101 et seq., the trustee in a deed of trust is a neutral third party who holds legal title to the property. If the trustor (borrower) defaults, the trustee has the authority to conduct a non-judicial foreclosure sale (trustee's sale) without court involvement. The trustee acts in a fiduciary capacity for both parties but primarily carries out the lender's (beneficiary's) instructions upon default.
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Related Topics & Key Terms
Key Terms:
Related Concepts
TILA is a federal law that requires lenders to disclose the true cost of credit to borrowers, including the annual percentage rate (APR), total finance charges, and loan terms. It is implemented by Regulation Z.
A trustee sale is a type of foreclosure where a trustee, appointed under a deed of trust, sells the property at auction to satisfy the debt.
Usury is the practice of charging an interest rate that exceeds the maximum rate permitted by state law. Usury laws protect borrowers from excessive interest charges on loans.
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