A Notice of Default (NOD), also known as a Pre-Foreclosure Notice, is a notice sent to a homeowner when they have defaulted on their mortgage payment at least 3 months consecutively. If a homeowner does not cure the payments in arrears, they are at serious risk of losing the property by the lender. The lender may sell the property at an auction to recover the payments and amount owed.
As a homeowner, what should you do if you find yourself in this situation? Take action immediately.
Contact the lender immediately to discuss any options you may have in resolving it. The lender may offer to remodify your home loan to prevent a foreclosure.
If you don’t have the option for a loan modification, then the main concern is to protect your equity in the property and your credit score. Depending how long you’ve owned the property and the current property’s value, you may have significant equity in the property. If the property is foreclosed, you will lose all the equity, and possibly still owe the lender any fees and penalties. Additionally, if you are foreclosed, this will have a significant negative impact to your credit score, which will make it difficult to purchase another home, or rent a home afterwards.
Can you sell your property?
The short answer is “Yes.” However, this needs to be done in a timely manner and with immediate urgency. You will need to sell the property before the lender sells it at an auction. To be frank, if the lender will not do a loan modification, selling the property is the best option for a homeowner facing a foreclosure — unless you already have the funds to pay the late payments and penalties owed. Selling the property allows you to cash in on the equity money, which puts that back in your bank account, and additionally help stabilize your credit score.
In some situations, you can also sell the property and lease it back from the buyer for a negotiated period, to help decrease the stress of moving right away. Yes, you will have to move and rent a home afterwards, however, at the end of the day you’ll have money back in your pocket and be able to rent your next home. Once your finances are stabilized, you can then relook at purchasing a home again in the future.
Focus on stabilizing your current situation and most importantly decrease the stress for yourself, your family, and your personal health. A property is not something you want to risk your health for.
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If you’re in this situation, you can contact me directly 213-608-5837 (call or SMS) for a complimentary initial consultation, property value assessment, or other questions you may have in Selling, Buying, or Investing in real estate.
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Jason Agcaoili is a realtor with HomeSmart Realty Group, serving the Los Angeles Metropolitan area, South Bay and Long Beach. He is a member of the California Association of Realtors and the South Bay Association of Realtors. CA DRE #01947185. For more information, please visit JASONAREALTOR.com.