Request for Notice of Default and Sale. Civil Code Section Power of Sale Foreclosure. Decision to Foreclose Assessment Lien. Diamond v. Superior Court Cal. Financial Freedom Senior Funding Corp. To that end, we've taken the liberty of briefly summarizing what to expect from each type of foreclosure below.
Read them over to get a better idea of how your state will handle the notice of default. In a judicial foreclosure state, typically your mortgage will outline how many missed payments you can have before a notice of default gets sent by your lender. Generally, most mortgages allow for days of delinquencies. However, after that time period has passed, the lender is required to send you a default letter and to file a formal notice of default with the state court in which the lien is recorded.
After the default notice has been recorded, there will be a hearing to decide whether or not to activate the lien. In some cases, the borrower must be given a chance to rectify their delinquent payments or to reach a settlement with the lender before the lien can be called into action.
Once the court grants the lender a judgment of foreclosure, the lender can move forward with a foreclosure sale. At that point, the lender will file a notice of sale and hold an auction. If the property is sold to the highest bidder, the lender will go back to the court and ask for help evicting the homeowner. In a nonjudicial foreclosure state, the timeline for foreclosure is often even shorter. Here, the lender or their trustee does not have to go through the court system in order to foreclose on the home.
In this case, you will likely have signed a mortgage or deed of trust that contains a power of sale clause, which gives the lender the right to sell the property in order to pay off delinquent mortgage debt. In this case, all the lender or their trustee has to do is file a notice of default with the county recorder's office. With this type of arrangement, it's not uncommon for the notice of sale and then notice of default to be combined or sent at the same time. Usually, a notice for sale is also published in the local newspaper.
Once the notice of sale has been published, the auction will take place at the specified date and time and the property will be sold to the highest bidder. Again, after that happens, the homeowner will be evicted. With all that in mind, it's important to note that receiving a notice of default does not necessarily mean that you have to go all the way through to foreclosure and eviction.
In most cases, the lender will give you plenty of chances to become current with your loan, which will stop the foreclosure process entirely. However, that is not to say that receiving a notice of default doesn't have an impact. Most of the time, receiving a foreclosure notice like this will have a ripple impact on your finances. In particular, default notices are reported to your credit bureaus by your loan servicer, meaning that it will have a negative impact on your credit score.
Beyond that, though, it may also have an impact on your ability to be approved for another loan in the future. As stated above, when the homeowner has a missed payment or a history of missed payments, the best thing to do is get in touch with the lender before they provide you with a written notice of default.
In many cases, the lender will be able to work with you to resolve your debt without having to move forward with notice requirements. In short, it should go without saying that you should try your best to avoid default notices and foreclosure proceedings whenever possible. While receiving a notice of default doesn't necessarily mean that your home will go to foreclosure, it's not a good thing. With that in mind, if you ever receive written notice of default, your first step should be to contact your lender as soon as possible and to work with him to bring your loan up to date.
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Glossary N Notice of default Notice of default Notice of default is a money term you need to understand. What is a notice of default? More From Bankrate Mortgage and real estate news this week: Advice for buyers looking at flipped properties; rates fall again Expert predictions on where mortgage rates are headed, and why now is the time to refi.
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