A notice of default is a formal letter saying you've fallen behind on your mortgage and that the lender may start the foreclosure process. It's serious, but it usually isn't the end of the road. Here's what to do first.
1. Read it carefully and note the dates
Find the amount needed to catch up (often called the "cure" or "reinstatement" amount) and the deadline. Foreclosure timelines vary a lot by state. In Texas, for example, a lender generally must give at least 20 days to cure the default before sending a notice of sale, and the notice of sale must go out at least 21 days before the sale. Other states can take months or more than a year. Don't guess: confirm your timeline with an attorney.
2. Don't ignore your lender
Call your loan servicer. Ask about a repayment plan, forbearance, loan modification, or other loss-mitigation options, and ask how to apply. Keep notes of every call: date, name and what was said. Send documents by a method you can track.
3. Get free, trustworthy help
A HUD-approved housing counselor can help at no cost. Call 800-569-4287 or search at hud.gov/counseling. If a sale date is close, talk to a real estate or foreclosure-defense attorney right away.
4. Know all your options
- Catch up (reinstate) the loan, if you can.
- Loan modification or repayment plan through your lender.
- Sell the house, traditionally if you have equity, or on terms if you don't.
- Short sale or deed in lieu of foreclosure.
- Bankruptcy, which may pause a foreclosure. Talk to an attorney.
5. Watch out for scams
Foreclosure attracts scammers. Be very cautious of anyone who asks for upfront fees, tells you to stop talking to your lender, asks you to sign over your deed in exchange for a promise to "save" your home, or guarantees results. The Federal Trade Commission has more at consumer.ftc.gov.