David purchased a home in Hot Springs using a deed of trust. After making payments for three years, he lost his job and defaulted. The trustee initiated a non-judicial foreclosure. Before the trustee's sale is completed, which right may David exercise under Arkansas law?
Correct Answer
D) The equity of redemption, allowing him to cure the default and stop the foreclosure before the trustee's sale is completed
Before a foreclosure sale is completed, a borrower in Arkansas has the equity of redemption — the right to cure the default by paying all amounts owed (including principal, interest, fees, and costs) and thereby stop the foreclosure process. This equitable right exists prior to the trustee's sale and is recognized under Arkansas law governing deeds of trust. Once the trustee's sale is completed, this right is extinguished.
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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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