Notice of Default
A Notice of Default (NOD) is a formal legal document filed by a lender when a borrower falls significantly behind on mortgage payments, typically after 90-120 days of delinquency. This notice officially starts the foreclosure process and gives the borrower a final opportunity to cure the default before the property is sold.
Example
“After missing three mortgage payments, the homeowner received a Notice of Default, starting the foreclosure process.”
Memory Tip
NOD your head sadly - it's bad news that you've failed to pay and everyone will know.
Why It Matters
Receiving a Notice of Default means you're in serious danger of losing your home through foreclosure, but you still have time to save it by catching up on payments or negotiating with the lender. This is often your last chance to resolve the situation before foreclosure proceedings accelerate.
Common Misconception
Many homeowners think receiving a Notice of Default means they must immediately move out, but they typically have several months to resolve the default before losing the property.
In Practice
After missing four mortgage payments, your lender files a Notice of Default with the county recorder and sends you a copy. You now have 90 days (in most states) to pay the full amount owed or work out a payment plan before the foreclosure sale is scheduled.
Etymology
From Old French 'notice' meaning 'knowledge' and Latin 'defaltus' meaning 'failure,' creating a formal announcement of payment failure.
Common Misspellings
Compare today's mortgage rates
More in real estate
Other real estate terms you should know
Need financial definitions?
Clear definitions for 2,500+ finance, insurance, and investing terms.