Notice Of Default – What Does It Mean?

live in Syracuse and get a foreclosure notice of default?

The first step to a foreclosure process is issuing a notice of default. Typically the notice will be attached to a front door or window of the home. The note should state that the owner has fallen behind on their mortgage. If the homeowner fails to pay their mortgage, the lender will then take action in seizing the home.

Federal Laws Regulating Foreclosure

Back in the day, the lender could file a notice of default at its own discretion, but when the 2008 crisis came, the federal laws have made sure that loaning companies are providing enough time for open communication in order for the foreclosure process to begin. In a lot of cases, the loaner must contact and offer their assistance by the time the borrower is 45 days late on their payment. The foreclosure will not start in earnest before the borrower is over 120 days delinquent. The first step to a foreclosure process is issuing a notice of default. Typically the notice will be attached to a front door or window of the home. The note should state that the owner has fallen behind on their mortgage. If the homeowner fails to pay their mortgage, the lender will then take action to seize the home.

Notice of Default and the Short Sale

Dual tracking is now prohibited by federal law. They also prohibit the process of heading towards foreclosure while the owner is in pursuit of a short sale or any other loss mitigation options. Short sales or any loan modifications put a halt in the foreclosure process until the application has been reviewed. Other states, such as California, have rules even more restrictive for dual tracking.

It isn’t required of a lender to retain the option of stopping the foreclosure. To be honest, some investors, especially prior to the housing crisis, routinely continued with the foreclosure. This was due to it being the quickest option and a likely way of producing more money than a short sale. 

The Bottom Line

If you receive a notice of default, it shouldn’t be much of a surprise. I only say this because the foreclosure process does not begin until you have fallen well behind your payments and your lender has tried to contact you multiple times. If you may be at risk of default, be aware that you have rights so be sure to contact your lender.


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