What Happens If You Receive a Foreclosure Notice?

Lenders file default notices when borrowers are behind on their mortgages.

After you miss several mortgage payments, your lender will notify you in writing that you are in default and that the company can foreclose on your home if you do not bring the balance current. The foreclosure process involves various notices.

Time Frame

After several missed payments--usually three months or more--your lender will initiate pre-foreclosure with a Notice of Default (NOD). During this grace period before the bank repossesses or sells your home, you can repay the default amount, plus fees and costs, reinstate your loan and avoid foreclosure, says Realty Trac. Lis Pendens is another type of pre-foreclosure notice which places your property under court jurisdiction.

Types

At the expiration of the pre-foreclosure period, the lender may authorize its trustee to sell your property at auction. A Notice of Trustee's Sale (NTS) notifies you of the sale date. A Notice of Foreclosure Sale (NFS) notifies you of the sale date if the court has approved the foreclosure--as with Lis Pendens.

Potential

There are alternatives to paying the default amount after receiving a foreclosure notice. You may sell your home to a third party and use the proceeds to pay the lender; let the trustee sell it at auction; sign a deed-in-lieu of foreclosure during the pre-foreclosure period--essentially returning the property to your lender--or let the bank repossess the property at auction.

References

• Realty Trac: Foreclosure Overview & Foreclosure Process
• Realty Trac: Definitions
• Teach Me Finance: Deed-in-lieu