If you haven’t refinanced your mortgage in the last year, now is the time.
What is a notice of default?
If a borrower falls behind on his mortgage payments, the mortgage lender might file a notice of default, which is an official public notice that the borrower is in arrears. It is one of the initial steps in the foreclosure process.
Getting a notice of default doesn’t mean that the mortgage lender automatically will foreclose on your home, or that there’s nothing you can do to stop it once the process has started.
In fact, you can halt the foreclosure proceedings by getting caught up on your mortgage payments before the lender takes further legal action. However, a notice of default may appear on your credit report, potentially damaging your credit score and making it more difficult to get other types of credit and loans, and possibly hindering your ability to refinance your home loan.
Lenders typically use a notice of default in a nonjudicial foreclosure, or, in other words, when they don’t go through the court to foreclose on the home. Once the borrower is behind enough on payments for the lender to consider foreclosure, the mortgage company starts by filing the notice of default with the county recorder’s office.
The notice includes detailed information about the borrower and the debt, including the borrower’s name and address, and the name and address of the lender. It also includes a description of the property and the debt, as well as what the borrower must do to resolve the debt and what happens if he doesn’t. After this, the next step is filing a notice of sale.
Notice of default example
If you’re several months behind on your mortgage payments, the lender will send you a letter, notifying you that you’re in arrears and stating how much you must pay to make the loan current.
If you don’t pay that amount by a specific deadline, the lender may begin foreclosure proceedings by filing a notice of default, which makes the issue public record instead of a matter between you and the lender.
If you don’t pay the amount requested by the due date, the lender will file a notice of sale and prepare to seize your property and sell it.