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Hey guys, Jessica here with Particular Properties. Today I wanted to discuss the notice of default. If you are a homeowner here in the state of Florida and you have missed some mortgage payments, you’ve probably received this in the mail, and it can be a little bit overwhelming with all the paperwork that you’re receiving. So I kind of wanted to go over the notice of default and what it means, and I feel like if you are knowledgeable in what your options are and how to address it, you can feel a little bit better when it comes time to contacting the bank and negotiating the debt. So I want to go over what the notice of default is. How does it work in the state of Florida? What does it mean if you are receiving it in the mail? How does it affect you? And most of all, your options after you receive the notice of default and working those options out with your lender.
Okay, real quick, a little bit about who we are. Particular Properties, we buy houses for cash. We are licensed real estate professionals. We primarily work with homeowners that are facing foreclosure, inherited a property. You’ve got probate going on, maybe some bankruptcy, divorce, code violations, liens, you name it, we have probably seen it and worked with you. So if you want to learn a little bit more about how we buy houses, I’m going to drop a link to our website down below in the comments so that you can check that out on your own time. But I want to get started on the notice of default and what it actually is. All right, the notice of default is basically a formal letter from your lender telling you that you’ve defaulted on your loan. It typically arrives after you’ve missed three or more monthly payments.
So a good 90 days has gone by, you haven’t made a payment, and this thing shows up in your mailbox. It is a serious notice, but it doesn’t mean that you’ve lost your home and you’re in foreclosure and your house is going up for auction. It’s basically the beginning stages, and the lender is giving you a chance to catch up on the back debt that you owe or negotiate with them and take action before they actually file the suit. Florida is a judicial state, so basically that means that the lenders have to go through the court system to foreclose on the property, and that notice of default is their first step before filing the foreclosure lawsuit. So even though they have filed this document with the courts, it still means you have like a window to resolve the situation.
Once you receive it in the mail, you typically have about 30 days to catch up on the missed payments, or you can negotiate with your lender a prepayment plan or some other options that we’re going to go over in the next slide. But the biggest takeaway from this is to keep that line of communication open with your lender. In no way is it going to be beneficial for you to just disregard the letter, ignore it, don’t call them back, don’t take charge of the situation, because your options are going to dwindle the longer it takes for you to respond to them.
After the 30 days to catch up or to contact them, if they don’t hear from you, the lender is going to file for a lis pendens, and this lis pendens is a legal notice of foreclosure and it starts the legal process. Okay. So how it affects you and your options. So obviously if you’ve missed the payments, the lender is going to alert the credit bureaus, so that’s going to have a negative impact on your credit score. You’re also probably going to receive some solicitations via mail, probably some phone calls and texts from everybody, from wholesalers to investors to realtors to private money lenders just offering their services because now that the lis or notice of default is filed in with the county, everything is public record. Your options for when you talk with your lender, there’s actually a few that you can kind of run through.
A loan modification is going to be a way you can adjust your loan terms. Sometimes they can make this more affordable as far as payments. It’s not going to wipe your debt out, it’s just going to kind of spread it out over a length of time so that it gives you time to pay it back. There’s a reinstatement. Basically, this is for people who maybe have come into money, maybe they were waiting on some money to come in and they’re able to just pay all of the back debt that is owed, and then that brings the loan current and therefore it stops all foreclosure proceedings. A prepayment plan is also another way that they can spread those missed payments out over a length of time to make it a little bit more easy for homeowners to get caught back up.
A short sale is going to be for homeowners that have no equity in their home. So basically, if you owe more than your home is worth, a short sale may be an option. This is going to be something that requires your lender to approve. It’s not something that you can just voluntarily choose to do. Same with a deed in lieu, that is going to be approved by your lender as well. And basically what this is is you voluntarily return your home to the lender. The con about doing this is you literally walk away with nothing. So if you have equity in your home, this may not be a good option for you because you don’t get to walk away with any money. Bankruptcy is another option. I’m seeing an uptick in the chapter 13 filings. A lot of people are filing the bankruptcy because this is a quick way to stop foreclosure. It does have a lot of consequences, so I highly recommend speaking with an attorney about your bankruptcy options and how it will affect you in the future.
Another great option is to sell your house for cash. This is a great option for homeowners who need that quick sale. Maybe you’ve got some deferred maintenance around the house and you need to sell your house fast. A cash offer is going to be, while it’s not going to be your highest offer, it is going to be a quick resolution to the problem. So we work with a lot of homeowners that, again, who have their house already scheduled for sale and as far as with the auction, and they come to us and they’re like, “Hey, we’re going to lose our house next month or next week, whatever the timeline is, and we need to sell this bad boy quick and we’d like to have some cash in our pocket.”
So selling to a cash buyer is going to be a great option. If that is something that kind of situation you’re in. If you have a house that is maybe it’s market ready, there’s not a lot of deferred maintenance, you’ve got some time, doesn’t matter where you are in the foreclosure timeline, maybe you’re still in the beginning, but even if you have your house scheduled for auction and the house is probably, it could be three to four months out of sale, you could still list your house with a realtor. This is going to be best for homeowners who have the time. Maybe they have the money for commissions to pay the commissions and they want top dollar. So listing your house with a realtor and putting it on the MLS is going to be your best route if you want top dollar for your house and you don’t mind paying the realtor commissions.
Okay, the Florida timeline for foreclosure, so again, Florida is a judicial state. So the first step that is always going to happen or always should happen is the sending out of the notice of default. This is just kind of like a flash warning to the homeowner, “Hey, we haven’t received a payment in three plus months. If you don’t do this, this, and this and pay this amount or negotiate, we’re going to go ahead and file for suit and file for lis pendens.” Once you’re in the lis pendens, it’s kind of considered the pre-foreclosure. So things have been officially filed and they’re going to be moving forward. Between the lis pendens and the judgment, there’s going to be a lot of back and forth talking between both parties, the plaintiff and the defendant.
All of this is public record, so if you want to know where you’re at, if you’ve been filed the lis pendens, you can always log on to the clerk of court within your county or the county that the house is in. You can always see where you’re at there with communications, because all the dockets are public record. So when it comes time for the judgment, that is when the lender has approved or the court has approved the lender’s judgment amount and the judgment to move forward. So once they do that and they approve it, then they set the date for the house to go to auction. All auctions are public. Most of the counties in Florida are online. There are a handful that are still in person, but this is when private investors are going to be bidding for your house on the market.
So that’s pretty much it. A notice of default is pretty straightforward. So if you’ve received a notice of default in the mail and you still have questions, hopefully this video has answered them. But if you still have questions, we’re happy to help you in any way we can. Just please note that all the information in this video is for educational purposes only. We are not providing any kind of legal advice or tax advice, but we look forward to connecting with you. If you have questions, we would love to chat. Thanks so much for watching.
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