Notice of Default and Its Role in the Foreclosure Process
What is a Notice of Default. Typically your mortgage company will not file a notice of default until you are at least 60 days late (this may vary from state to state).
Once you are 60-90 days behind on your payments your mortgage lender will file in the public records where the property is located a public notice called the Notice of Default. In some areas of the country, the Notice of Default is placed on the front window, which adds to the shame of the foreclosure process. In the default notice itself it will clearly state that the borrower (you) are behind in the payments and that the lender will seize the home if you do not make your payment soon. Such a notification is the formal beginning of foreclosure proceedings.
As we have spoken of previously there is a time line associated with foreclosure proceedings. Your troubles can begin when you miss your first payment. Your lender is not required (this may vary by State) to contact you after 30 days but most will do so because they do not want to lose another mortgage. However, they will certainly report the fact that you are late to credit agencies, which can and will if continued devastate your credit score. With each payment that passes it makes it harder and harder for you to refinance your loan, which could provide repreive for your finances in the form of a lower monthly payment. Further, missing a payment often can carry fees from your lender in excess of 3%, which hurts when you are already behind on your payments.
At the 90 day point your lender will exercise the notice of default spoken of above. As aforementioned this initiates the formal foreclosure procedure. This process is inevitable unless you make up the missing payments. Some are slower in filing the notice of default and in some cases the process has taken up to a year. “They may do it as early as 90 days, or as late as a year,” explained Anthony Hsieh, president of Lending Tree. “It really depends on the lender’s temperament.” Hsieh goes on to say that once one reaches the notice of default juncture things are grim and ones options are greatly diminished.
The take away here, if it isn’t clear yet, is that you should communicate with your lender to stop foreclosure proceedings prior to the 90 day threshold. In other words do not get a notice of default, rather as has been stated time and time again communicate with your lender and seek professional help.