Notice Of Default

If you receive a notice of default (NOD) for your mortgage, you need to act quickly.   A NOD is a notification given if you have not made payments by the predetermined deadline (usually specified in your Deed of Trust).  It spells out repayment  (sometimes called curing) schedules and spells out the foreclosure process and timeline.

You have until five business days before the foreclosure sale to cure the default. To cure the default you have to pay off missed payments, late charges, and fees for initiating the foreclosure. If you do not cure the default, the trustee can take steps to hold a foreclosure sale.

Steps to take if you receive a NOD:

1)  See if you agree with the amount the trustee says is due. If you do not believe you owe the amount claimed, write a letter as soon as possible disputing the amount, with copies of the proof of payments.

2) If you owe the money, and have equity in your home, contact your lender or a professional (foreclosure specialists, investors) immediately.  There are private investors who may lend you up to 70% of the value of your home. Most banks or mortgage companies will not lend you money once an NOD is filed.

3)  You might consider a "work-out agreement." A lender may give you more time if you have a definite plan for repayment. If the lender agrees to give you more time to repay the loan, that agreement should be in writing. These agreements are commonly known as work-out agreements.

4) If you can not get a loan or secure a work-out agreement, you should consider selling your home before you lose it in foreclosure. Selling the home may allow you to save your equity and protect your credit. This may help you in relocating to a new home.

Bankruptcy may not save your home.  It may delay the foreclosure process but the lender has certain rights as defined in your Deed of Trust.  If you contact an attorney, they usually offer bankruptcy as an alternative.  "Foreclosure Specialists" often contact homeowners who have received a notice of default. They may claim they can prevent the foreclosure, and may even suggest that you transfer title to your home to them. Be wary of these buy/leaseback agreements.

Resources

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