Sandra is a real estate agent in Fayetteville helping a buyer understand Arkansas mortgage law. The buyer asks whether Arkansas uses mortgages or deeds of trust and what the key practical difference is. Which explanation is most accurate?
Correct Answer
B) Arkansas uses deeds of trust; the key practical difference is that deeds of trust allow non-judicial foreclosure, making the process faster than judicial foreclosure
Arkansas primarily uses deeds of trust under Ark. Code Ann. § 18-50-101 et seq. The most significant practical difference is that deeds of trust enable non-judicial (trustee's sale) foreclosure, which does not require court involvement and is therefore faster and less costly than the judicial foreclosure process required in mortgage states. This is a key advantage for lenders operating in Arkansas.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Foreclosure is the legal process by which a lender takes possession of a property when a borrower fails to make mortgage payments. It allows the lender to sell the property to recover the outstanding debt.
The loan-to-value ratio (LTV) is the percentage of a property's appraised value or purchase price (whichever is lower) that is being financed through a mortgage. LTV = Loan Amount / Property Value.
A comparison of the major mortgage loan types—conventional, FHA, VA, and USDA—covering their eligibility requirements, down payment amounts, mortgage insurance rules, and best use cases.
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