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Notice of Default - What is a Notice of Default

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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.

At the time of writing, Elizabeth Weintraub, DRE # 00697006, is a Broker-Associate at Lyon Real Estate in Sacramento, California.

Also Known As: Reinstatement period, notice of public auction
Common Misspellings: notice of defult

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