Non-judicial foreclosure is most commonly applied in terms of Arkansas foreclosure laws. This means that the primary instrument of security used between lender and borrower is the Trust Deed, and this is a title theory state. The judicial process also takes place when the promissory note is a Mortgage Lien, but this state is in the process of converting to being mainly a title theory state.
Lenders in Arkansas are allowed to use both these methodologies, but it has been found that the non-judicial foreclosure takes less time, and also works out to be less expensive for both the lender and the borrower. On loan default, the power of sale clause is invoked, giving the trustee who represents the lender, the necessary power to foreclose on a property.
Notice requirements are strict and the trustee is also required to be an attorney. Notice of default and intention to sell has to be recorded in the county recorders office, and published in general circulation newspapers. At least 60 days must elapse after the notice of default before any further foreclosure action takes place.
The lender must also publish the notice of sale for 4 consecutive weeks prior to the sale, and this has to appear at the courthouse, in newspapers, and on the internet. There are strict rules regarding the time of the auction which takes place a the county courthouse between 10am and 4pm.
The trustee auctions the property for no less than 2/3 of the amount owing on the debt, and the sale may be postponed. However not for longer than 30 days or a new notice must be filed. In Arkansas, non-judicial foreclosure takes around 120 days, or longer in the case of a postponement. The lender may file for a default judgment, and Arkansas laws do not allow for rights of redemption.