Arkansas Foreclosure Defense, TRO, Counterclaims, and Loss Mitigation Package

ARKANSAS FORECLOSURE DEFENSE — TRO, COUNTERCLAIMS, AND LOSS MITIGATION PACKAGE

PART 1 — PRE-DEFENSE INTAKE CHECKLIST

Client: [_______________________________] File No.: [____________]
Property: [___________________________________________________________]
County: [_______________________] Date of intake: [__/__/____]
SALE DATE (if scheduled): [__/__/____] Time: [____ a.m./p.m.]

Documents to collect

☐ Original Note with all endorsements/allonges
☐ Recorded Mortgage / Deed of Trust
☐ All recorded Assignments
☐ Recorded Substitution of Trustee (if applicable)
☐ Demand / breach letter (typically 30-day cure under security instrument)
☐ Fair Debt Letter (15 U.S.C. § 1692g) from trustee/firm
☐ Recorded Notice of Default and Intention to Sell — Ark. Code Ann. § 18-50-104
☐ Newspaper publication tear sheets (once a week for four consecutive weeks — § 18-50-105)
☐ Recorded affidavit of mailing and publication (§ 18-50-106)
☐ Loan payment history (life-of-loan)
☐ All loss mitigation correspondence (12 C.F.R. § 1024.41)
☐ Escrow analysis
☐ Credit reports (three bureaus)
☐ Bankruptcy discharge (if applicable)

Threshold issues

☐ Does the Statutory Foreclosure Act even apply? (§ 18-50-116(c) — only mortgage company, bank, or S&L)
☐ Is the property agricultural? (Act does not apply)
☐ Did the Notice of Default contain all elements of § 18-50-104?
☐ Was the Notice published in a newspaper of general circulation for four (4) consecutive weeks?
☐ Was the Notice recorded and mailed to the debtor and all junior lienholders of record?
☐ Did borrower receive 12 C.F.R. § 1024.39 early intervention?
☐ Was a complete loss mitigation application submitted more than 37 days before sale (dual-tracking bar)?
☐ Does plaintiff hold the original Note (standing)?
☐ TIME-CRITICAL: must assert all claims/defenses BEFORE the sale or waived (§ 18-50-116(d)(2)(B))
☐ Trustee qualification under § 18-50-102
☐ Did borrower exercise § 18-50-114 right to cure before sale?
☐ SCRA — 50 U.S.C. § 3953
☐ Chapter 13 bankruptcy referral
☐ Fair-market-value defense to deficiency — § 18-50-112(b)

PART 2 — EX PARTE MOTION FOR TEMPORARY RESTRAINING ORDER AND PRELIMINARY INJUNCTION

Plaintiff applies ex parte under Ark. R. Civ. P. 65(b) for a TRO enjoining the foreclosure sale scheduled for [__/__/____] at [____ a.m./p.m.] at [location]. In support:

1. Likelihood of success on the merits. Defendants failed to strictly comply with Ark. Code Ann. § 18-50-101 et seq., including [defects in Notice of Default; failure to publish four consecutive weeks; defective mailing/posting; lack of standing; violation of 12 C.F.R. § 1024.41 dual-tracking prohibition].

2. Irreparable harm. Real property is unique. Loss through a trustee's sale destroys Plaintiff's homestead and forever bars defenses against subsequent purchasers for value (§ 18-50-116(d)(2)(C)).

3. Balance of equities favors temporary preservation of the status quo.

4. Public interest in strict statutory compliance and federal loss-mitigation rules.

5. Bond should be set at a nominal amount under Ark. R. Civ. P. 65(c) due to financial hardship and strength of merits.

WHEREFORE Plaintiff requests: (a) TRO restraining the sale; (b) OSC on preliminary injunction; (c) order requiring Defendants to record a rescission of the Notice of Default; (d) further relief.

PART 3 — VERIFIED COMPLAINT FOR WRONGFUL FORECLOSURE, QUIET TITLE, AND DAMAGES (COUNTERCLAIMS)

Caption

Parties, jurisdiction, venue

1. Plaintiff is a citizen of Arkansas residing at the property.
2. Defendant [MORTGAGEE] is a [bank / savings and loan / mortgage company] doing business in Arkansas.
3. Defendant [TRUSTEE] is the substituted trustee.
4. Jurisdiction lies under Ark. Code Ann. § 16-13-201; venue lies in the county where the land is situated under Ark. Code Ann. § 16-60-101.

Factual allegations

5. Plaintiff executed the Note and Mortgage/Deed of Trust on [__/__/____] in the principal sum of $[___________] secured by the property at [ADDRESS].
6. On [__/__/____] Defendants caused a Notice of Default and Intention to Sell to be recorded.
7. The Notice failed to comply with §§ 18-50-104 and 18-50-105 in that [DESCRIBE SPECIFIC DEFECTS — e.g., omitted required statement, defective mailing, or insufficient publication].
8. Plaintiff submitted a complete loss mitigation application on [__/__/____], more than 37 days before the scheduled sale.
9. [If supported by the facts: After receiving the complete application more than 37 days before the sale, and before any exception in 12 C.F.R. § 1024.41(g)(1)–(3) applied, Defendants [moved for foreclosure judgment or an order of sale / conducted the foreclosure sale] on [DATE], in violation of § 1024.41(g). Omit this allegation if no prohibited step occurred.]

Causes of action

COUNT I — Wrongful Foreclosure / Failure to Strictly Comply with Ark. Code Ann. § 18-50-101 et seq. Sale void; injunction; quiet title.

COUNT II — Fraud. Affirmative misrepresentations regarding default, ownership of the Note, and availability of loss mitigation.

COUNT III — Violation of RESPA / Regulation X, 12 U.S.C. § 2605; 12 C.F.R. §§ 1024.35, 1024.36, 1024.41. Actual damages, additional damages up to $2,000 upon proof of a pattern or practice of noncompliance, costs, attorney fees.

COUNT IV — Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. Actual damages, statutory damages up to $1,000, costs, fees.

COUNT V — Fair Credit Reporting Act, 15 U.S.C. § 1681s-2(b). Actual damages, statutory damages, punitive damages for willful violation, costs, fees.

COUNT VI — Arkansas Deceptive Trade Practices Act, Ark. Code Ann. § 4-88-101 et seq. Actual damages, attorney fees.

COUNT VII — Breach of Contract.

COUNT VIII — Quiet Title, Ark. Code Ann. § 18-60-501 et seq.

COUNT IX — Declaratory and Injunctive Relief.

Prayer

WHEREFORE Plaintiff prays for:
A. TRO and preliminary/permanent injunction restraining the sale;
B. Judgment declaring the Notice of Default void;
C. Quiet title in Plaintiff;
D. Actual, statutory, and punitive damages;
E. Attorney fees and costs;
F. Such other relief as is just.

Verification

I, [PLAINTIFF], being first duly sworn, state that the factual allegations in this complaint are true to my personal knowledge, except matters expressly stated on information and belief, which I believe to be true.

Plaintiff's signature: ______________________________ Date: [__/__/____]

Subscribed and sworn to before me on [__/__/____] by [PLAINTIFF NAME].

Notary Public: ______________________________ My commission expires: [__/__/____]

(Notarial seal)

PART 4 — IF JUDICIAL FORECLOSURE: VERIFIED ANSWER WITH COUNTERCLAIMS

Defendant answers the Complaint as follows:

1. Defendant [admits / denies / lacks knowledge] the allegations of Paragraph 1.

[Continue paragraph-by-paragraph.]

Affirmative Defenses

1. Failure to state a claim — Ark. R. Civ. P. 12(b)(6).
2. Lack of standing / real party in interest — Ark. R. Civ. P. 17(a).
3. Failure to provide proper Notice of Default.
4. Failure to comply with 12 C.F.R. § 1024.41 (dual-tracking).
5. Payment / accord and satisfaction.
6. Estoppel and waiver.
7. Unclean hands.
8. Unconscionability.
9. Statute of limitations.
10. SCRA, 50 U.S.C. § 3953.
11. Reservation of further defenses.

Counterclaims

(Same Counts I–IX as Part 3.)

Verification

I, [DEFENDANT], being first duly sworn, state that the factual statements in this answer and counterclaims are true to my personal knowledge, except matters expressly stated on information and belief, which I believe to be true.

Defendant's signature: ______________________________ Date: [__/__/____]

Subscribed and sworn to before me on [__/__/____] by [DEFENDANT NAME].

Notary Public: ______________________________ My commission expires: [__/__/____]

(Notarial seal)

PART 5 — LOSS MITIGATION APPLICATION PACKAGE (RESPA 12 C.F.R. § 1024.41)

Cover letter

[__/__/____]

[SERVICER NAME — Loss Mitigation Department]
[ADDRESS]

Re: Loan No. [_______________]
Borrower: [______________________________]
Property: [______________________________________________________]

I submit the enclosed loss mitigation application under 12 C.F.R. § 1024.41. Please review it and, if § 1024.41(b)(2) applies, send the written acknowledgment identifying whether it is complete or what more you require. Please confirm the date you received it. This letter does not assert a servicing error or request separate servicing information.

Sincerely,

[______________________________] Date: [__/__/____]

Application contents checklist

Include the items the servicer requires for this application; this checklist is an aid, not a universal document requirement. Record any additional items the servicer requests: [________________________________].

☐ Borrower Assistance Form (Form 710 or equivalent)
☐ IRS Form 4506-C
☐ 2 years tax returns
☐ 2 months pay stubs (or YTD P&L)
☐ 2 months bank statements
☐ Hardship affidavit
☐ Monthly budget
☐ Utility bill (occupancy)
☐ Recent mortgage statement
☐ Property tax statement
☐ Homeowner's insurance dec page
☐ Award letters for SSI/SSDI/unemployment/child support
☐ HUD-approved housing counseling certificate (find counselor at HUD.gov)

PART 6 — LOAN MODIFICATION REQUEST LETTER

[__/__/____]

Re: Loan No. [_______________]
Borrower: [_______________________________]
Property: [_______________________________]

I request a loan modification. Hardship: ☐ Job loss ☐ Income reduction ☐ Medical ☐ Death ☐ Divorce ☐ Disability ☐ Other: [_________]

Sincerely,

[______________________________]
[BORROWER]

PART 7 — DISCOVERY DEMAND (FIRST SET)

Request for Production

1. Original Note with endorsements/allonges and chain-of-custody log.
2. All recorded Assignments of Mortgage/Deed of Trust.
3. PSA / Trust documents.
4. Life-of-loan payment history.
5. Escrow analyses.
6. Notice of Default and Intention to Sell and proof of recording.
7. Newspaper publication tear sheets (four weeks).
8. Affidavits of mailing/posting.
9. All loss mitigation submissions and underwriting worksheets.
10. All policies on loss mitigation and dual-tracking.
11. Credit-bureau tradeline reporting.
12. Force-placed insurance invoices.

Interrogatories

1. Identify the holder of the Note and its physical location.
2. Identify each transferor and transferee in the chain.
3. Identify all loss mitigation options reviewed and denial reasons.
4. State whether loan was in default at acquisition (FDCPA inquiry).
5. Identify each affiant for sale-related affidavits and records reviewed.

Requests for Admission

1. Admit Defendant failed to publish the notice once a week for four consecutive weeks under § 18-50-105.
2. Admit the Notice of Default does not contain all § 18-50-104 elements.
3. Admit Defendant received a complete loss mitigation application more than 37 days before the sale and later [moved for foreclosure judgment or an order of sale / conducted the sale] before any § 1024.41(g)(1)–(3) exception applied.

PART 8 — BANKRUPTCY REFERRAL CHECKLIST

☐ Chapter 13 cure of arrears within a reasonable time (11 U.S.C. § 1322(b)(5)), subject to the applicable plan period under § 1322(d)
☐ Review a wholly underwater junior mortgage lien with bankruptcy counsel. In Chapter 7, an allowed claim secured by such a lien cannot be voided solely because the senior mortgage exceeds the property value. Bank of America, N.A. v. Caulkett, 575 U.S. 790, 792 (2015).
☐ Automatic stay under 11 U.S.C. § 362 halts trustee's sale
☐ Means test, filing fees, counseling certificate
☐ Refer to Arkansas bankruptcy panel attorney: [______________________________]

PART 9 — RESOURCES

• Center for Arkansas Legal Services: https://www.arlegalservices.org
• Legal Aid of Arkansas: https://www.arlegalaid.org
• CFPB find-a-housing-counselor: https://www.consumerfinance.gov/find-a-housing-counselor/
• Ark. Code Ann. § 18-50-101 et seq.: https://codes.findlaw.com/ar/title-18-property/

END OF ARKANSAS FORECLOSURE DEFENSE PACKAGE