Notice of Default: What It Means and What to Do
Key takeaways
A notice of default (NOD) is a public filing that notifies a borrower they have breached their mortgage contract by falling behind on payments.
It is often the first formal step a lender takes toward foreclosure, though in some cases it precedes negotiation or loan reinstatement.
The notice must state who the borrower and lender are, the property involved, the nature of the default, and what must be done to cure it and by when.
Respond quickly: contact the lender, review cure options, and seek legal or housing counseling if needed.
What is a notice of default?
A notice of default is a formal, public document filed with the court or recorded in the county where the property is located that states a mortgagor (borrower) is in default on their loan. It typically marks the beginning of a lender’s foreclosure process, though it can also be part of a protocol that opens a period for negotiation.
Typical information included
Borrower’s and lender’s names and addresses
Legal address of the property (and often parcel or legal description)
Description of the default (missed payments, amount past due)
Actions required to cure the default and any deadlines
* Lender’s stated intentions if the default isn’t cured by the deadline
How the process works
Mortgage contracts usually specify how many missed payments constitute default; many allow a short period (sometimes up to several months) before formal action.
If the borrower exceeds that threshold, the lender may file an NOD with the court or recorder’s office.
After filing, there may be a legally required waiting or cure period during which the borrower can pay the arrears, negotiate a modification, or pursue other options.
If the default is not cured, the lender can move forward with foreclosure actions, which can include activating the lien and seeking a court order to seize and sell the property.
Consequences
A notice of default and any subsequent foreclosure actions are reported to credit bureaus and can severely damage credit scores.
Foreclosure records can make it difficult to obtain future credit or a mortgage.
* Legal consequences vary by state and by whether the jurisdiction uses judicial or nonjudicial foreclosure processes.
What to do if you receive a notice of default
1. Read the notice carefully to understand the amounts and deadlines.
2. Contact your lender immediately to discuss options. Lenders may offer:
Reinstatement (pay past-due amount plus fees)
Loan modification
Forbearance or temporary payment plan
Short sale or deed in lieu, in some cases
3. Ask for a written record of any agreement.
4. Seek free or low-cost help: housing counselors approved by HUD, legal aid, or a consumer attorney experienced in foreclosure.
5. Keep documentation of all payments and communications.
Special considerations
Some lenders use a notice of default as a procedural step intended to prompt discussions rather than to foreclose immediately. Others treat it as the final step before foreclosure begins.
State law affects timelines, required notices, and borrower rights (right of redemption, mediation programs, etc.). Check local rules promptly.
* If you disagree with the default (for example, you believe payments were made), gather bank records and correspond with the lender to correct errors.
How serious is a notice of default?
* Very serious — it signals the lender may pursue legal action and foreclosure. Acting quickly can expand options to halt the process or mitigate damage.
Conclusion
A notice of default is a critical signal that mortgage delinquency has reached a formal stage. Promptly reviewing the notice, contacting the lender, and seeking qualified advice can often preserve options to reinstate the loan or negotiate a solution and reduce long-term financial harm.