Foreclosure in Northridge>Question Details

I Takimoto, Home Buyer in West Hills, CA

What does notice of default mean?

Asked by I Takimoto, West Hills, CA Tue Jan 24, 2012

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Yuri Katz’s answer
I'd be a bit more careful with definitions when it comes to crossing state lines, Lauryn.
In California, if we had to approach the court every time default occurs, nobody would be closing any sales these days. Assuming all loan documents were properly prepared, executed, acknowledged and recorded, Notice of default simply needs to be delivered and recorded on title to the property. Three months after, if the default hasn't been cured, the trustee sale / foreclosure sale / auction of the property can be scheduled as soon as 3 weeks after proper service, recording and publication of notice of trustee sale (NOS). Thus, by the book, you have about 4 months from the date of the notice of default to the actual public sale of the property.

When you get your loan from a bank or other institutional lender, you'll have to sign along with other documents two most important papers: Promissory Note that is an actual promise and commitment to repay the debt that would also specify the terms of such loan including interest rate, how interest is calculated [believe it or not our public is very uneducated and really thinks it's a simple interest computation :) ], number of payments, any penalties for early repayment or late payments, etc.; and Deed of Trust that ties that Promissory Note to the land or real property (with its detailed legal description) making it a collateral and giving authority to the trustee of that Deed to sell the property in the event of default. The Promissory Note specifies exactly what constitutes the default and how it can be cured.

Although I personally was able to postpone such sale date on numerous occasions for my sellers when it came to negotiating a settlement with lenders through short sale, it is a very weak position to be in and, of course, the outcome is never guaranteed. Obviously, the stronger the offer the better your chances.
0 votes Thank Flag Link Thu Feb 9, 2012
Quite simply. Your days are numbered if your the homeowner. If a potential buyer start getting your ducks in a row and hire an experienced REO expert familiar with the local market.
0 votes Thank Flag Link Wed Jan 25, 2012
Notice of Default or NOD is filed by the homeowner's mortgage company when they are 90 or more days late on their mortgage payments. It is part of the foreclosure process. Some properties which are listed as Short Sales may have a NOD recorded against it by the lender. The seller is trying to obtain a fair offer that their lender will accept which is less than the balance that they owe on their mortgage, that is why it is called a Short Sale.

Sara Mehrpouyan CDPE
Specializing in Short Sale & Foreclosure
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0 votes Thank Flag Link Tue Jan 24, 2012
Per Wikipedia:

A notice of default is a notification given to a borrower stating that he or she has not made their payments by the predetermined deadline. It dictates that if the money owed ( and sometimes an additional legal fee) is not paid in a given time, the lender may choose to foreclose the borrower's property. Any other people who may be affected by the foreclosure may also receive a copy of the notification.
Depending on your state regulations, a notice is often required to be sent to the property address as well as any primary residence (if it is an investment home) known for the borrower.

The notice is filed with the local court in which the property resides and becomes public knowledge.

Once a Notice of Default is received, again depending on the state, you still have time to re-claim the home by making a payment in full for the mortgage amount. You can also try to contact your mortgage company/note holder and see if there are any other options to re-instate the loan to active status.

If you have more questions regarding a situation you may be in, you should contact a local real estate attorney to answer your questions.

For more information about buying a property that has been served a notice of default, you can check out my response to a question from a few days ago:

http://www.trulia.com/voices/Property_QandA/Since_there_are_…

You can see my response in the middle...
0 votes Thank Flag Link Tue Jan 24, 2012
Definition: Lenders file in the public records where the property is located a public notice called the Notice of Default. In some states, the Notice of Default is also attached to the home, generally on the front window, like a big scarlet letter. It states that the borrower is in default, behind in the mortgage payments, and if the payments are not paid up, the lender will seize the home.
In California, lenders typically do not file a Notice of Default until the borrower is at least 90 days behind in making payments. When a borrower has missed 2 payments and is 60 days behind, at that point many banks send out a 30-day notice of intent, which they are required by law to do before filing a Notice of Default.

Lenders must then wait 90 days. During that 90-day period, the borrower has the right to make up the back payments and reinstate the loan. After 90 days, the lender is required to publish a notice in the newspaper for 20 days and then may sell the property to the highest acceptable bidder on the courthouse steps. If no acceptable bid is received, the trustee then conveys the property to the lender.
Web Reference: http://www.laura4homes.com
0 votes Thank Flag Link Tue Jan 24, 2012
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