You may wish to post this type of question on http://www.lawguru.com
You can get some free advice there from a lawyer.
Contact a Real Estate Attorney ASAP
verify when they filed the NOD prior to seeing the attorney and go from there.
From what you have said it doesn't sound right.
Are you sure you were not another month behind already?
So Cal Homes Realty
Depending on the type of loan you have, it may be in your best interest to do a short sale. More information can be found at http://www.shortsalesheep.com. I'd be happy to talk to you and explain the process.
Once you recieve your NOD, you will have 30 days to :cure: it - or bring your payments up to date. If this does not happen, the next notice you will receive is the auction date, taped to your door by the sherrif.
You can delay the auction if you are in contract with a short sale.
Let me know if you have questions- I'm here to help!
There's probably alot more information that would be needed to find out exactly what happened during the process.
Good luck and make sure you make an appoinment with an attorney soon!