A homeowner in Little Rock, Arkansas defaults on a deed of trust with an outstanding loan balance of $180,000. The trustee conducts a non-judicial foreclosure sale, and the property sells for $210,000. After paying the remaining loan balance of $180,000 and foreclosure costs of $6,000, how much surplus proceeds does the former homeowner receive?
Correct Answer
A) $24,000
Under Arkansas's non-judicial foreclosure process governed by the Arkansas Deeds of Trust Act (Ark. Code Ann. § 18-50-101 et seq.), when a trustee's sale generates proceeds exceeding the outstanding debt and foreclosure costs, the surplus is returned to the former homeowner (trustor). Calculation: Sale price $210,000 − loan balance $180,000 − foreclosure costs $6,000 = $24,000 surplus. This is a key feature of Arkansas's deed-of-trust foreclosure framework.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A fixed-rate mortgage has an interest rate that remains constant for the entire term of the loan, resulting in equal monthly principal and interest payments throughout the life of the mortgage.
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.
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