- When your lender sends you a default notice, it is informing you that it considers you in default of the original terms of your mortgage loan. At this time, your lender may be willing to work with you through a loan modification, workout or forbearance program to help you get current on your past-due payments. The default notice also serves as a warning that if you do not bring your loan current within a given period, usually around 30 days, your lender will accelerate your loan.
- Lenders typically send out a notice of acceleration when you are between three and four months past due on your mortgage payments. Time frames vary by lender. When you receive the notice, your lender is informing you that it intends to cancel and accelerate your loan. This means that you no longer have the remainder of the original term of your mortgage to pay off the loan and your lender is demanding the entire outstanding balance of your mortgage.
- Lenders will typically give you 30 days from the date on the notice to pay the loan in full. After the given time passes, the notice expires. Generally, at this time, your only option to keep your property is to pay off the mortgage in full. This usually means you will have to go to another lender and take out a new mortgage to pay off the balance of your original mortgage. If you do not do so, your lender will foreclose on your property.
- The two types of foreclosure are judicial and nonjudicial. In a judicial foreclosure, your lender must hire a lawyer to sue you and a judge must find in favor of your lender before it can sell your property at a public auction. In a nonjudicial foreclosure, your lender does not have to sue you to sell your property at a public auction. For this type of foreclosure, your lender needs to only advertise the sale date of your home through public notice, such as your local newspaper, for a given time period, usually around one month. After that time passes, your lender can sell your home at public auction.
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