What is a “Notice of Default”?

live in Omaha and get a foreclosure notice of default?

Have you or someone you know received a Notice of Default regarding a home in Nebraska? If so, here’s some information to help you understand what this means …

When a homeowner fails to make their mortgage loan payments, the mortgage servicer will understandably take action to stop additional financial loss. The way they do this is by issuing a Notice of Default (NOD) to the homeowner, which initiates the foreclosure process. This notice is filed with the county clerk’s office and states that the borrower is delinquent with payments and has defaulted on their mortgage agreement. Being served with a NOD is a serious matter; if the homeowner doesn’t pay off the amount past due by the servicer’s stated deadline, the homeowner may lose their home to foreclosure.

The Notice of Default signals the beginning of the “pre-foreclosure” process. It’s sent to anyone who has an interest in the property (any other loans, lenders, or even contractors who are owed money for work done to a property will get a copy) so they can step forward and claim what’s owed to them.

The Notice of Default must also be published in a newspaper and physically posted in a prominent place on the property itself, usually on the front door or a window.

If you’ve missed making payments on your home loan, the first and most important thing to do is speak with your mortgage servicer and together make a plan.

Here are a few additional steps you should take:

1. Educate yourself about the process.

Learn everything you can about the foreclosure process so you know what’s happening and what’s coming up next. Each state has it’s own rules and deadlines. If you’re reading this and live in the state of Nebraska, here’s a link to another article that may help regarding Nebraska’s Foreclosure Laws and Procedures. As you may know, foreclosure can have detrimental effects on a homeowner’s credit and future homeownership, so spend some time learning about how best to proceed.

2. Gather your resources.

There are also non-profit and government resources available out there. For example, there are organizations like Hope Now, a non-profit dedicated to helping and supporting homeowners who are working to solve challenging issues like foreclosure. The Federal Reserve Banks have set up regional Foreclosure Resource Centers which can also be a good resource for information and assistance. If you’ve been served with a Notice of Default, it may also be wise to consider talking with a foreclosure attorney. The National Consumer Law Center has attorneys who can provide you with legal advice. You’ll want good legal and tax advice to provide you with some peace of mind along the way.

3. Consider selling your home before foreclosure.

If you won’t be able to catch up on payments, it may make sense to sell your home to pay off the bank and avoid further damage to your credit. Depending on your situation and the timeline, it may not be possible to sell through a traditional Realtor. That process can take months and you might need to make improvements you can’t afford. An alternative to the traditional sale is selling your home directly to an investor who can buy your home quickly with cash. This option could help you avoid foreclosure. Selling the home at its current market value may allow you to pay off the balance of your mortgage and hopefully have some money left over. If you owe more than your home is currently worth, another option is a short sale. A home buyer like Anna Buys Houses can talk you through that option. Investors are often open to discussing different purchase ideas, even a rent-back situation where the homeowner is able to stay in their home. If you or someone you know is interested in what we could offer for your home, please contact us.

4. Continue to communicate.

It’s always good to keep in mind most banks involved really don’t want to be in the real estate business. They’d prefer to continue receiving loan payments as scheduled and not foreclose on someone’s property. But, as we all know, life happens, and if you aren’t able to make loan payments, they can very likely help you to come up with a reasonable plan to resolve the situation. It’s best to initiate and continue to be in conversation with them. Please whatever you do, don’t ignore their statements or other correspondence! And remember you don’t have to face the foreclosure process alone. Reach out to others who have gone through this type of challenge. Contact other local and/or governmental organizations like the ones mentioned in this article who also want to help.

Sometimes it does take a village to make it through hard times, but there may come a time in the future when you can help someone else with all you’ve learned and experienced.

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