Is a notice of default the same thing as pre-foreclosure

Question

The pre-foreclosure list most investors buy is built from notice of default filings, which is a specific recorded legal step, not simply the moment an owner misses a payment. A missed payment alone doesn't create a public record; the notice of default does, and that's typically what starts the clock that outreach lists are built around. So the two aren't interchangeable: not every late payment has reached the point of a filed notice. On ownership during this period: filing a notice of default does not transfer title. The owner of record still holds title and can still sign a deed to a buyer up until foreclosure actually completes, subject to the lender's lien being satisfied as part of the transaction. A title search before any contract is signed will confirm exactly who holds title and what liens are attached, which is the reliable way to avoid signing a contract before knowing what the chain of title actually looks like.

Rena Guide · Accepted Answer

The owner still owns the home, and yes, they can still sign a deed to you. That's the whole reason this stage exists as a strategy.

The strict meaning of a notice of default is a recorded document, filed with the county, that says the lender has formally declared the loan in default and started the process that ends at auction. It's public, and it's dated, which is why data platforms can pull it daily. Pre-foreclosure in strict usage is the period between that filing and the auction, and how long that runs is a state question before it's anything else. In non-judicial states, where a trustee can sell without a courtroom, it often lands in the three to six month range. In judicial states, where the lender has to file suit and get a judgment, it commonly runs past a year, and in places like New York, New Jersey and Florida it has routinely run two to three years. Pull the statutory timeline for the state the property sits in, and once a sale is actually scheduled, work off that date rather than a rule of thumb.

Your meetup guy was using the loose version. Plenty of people call a homeowner 30 or 60 days late "pre-foreclosure" too. That owner is real and might sell, but nothing has been recorded, so there's no public list to buy and no auction date pressing on them. When someone sells you a pre-foreclosure list, they mean recorded notices.

The part that trips people up is the payoff. The owner doesn't just owe the missed payments. They owe the full loan balance plus accrued interest, late fees, and the lender's legal and filing costs, and that figure only comes from a written payoff statement the lender gives with the owner's authorization. Investors who guess at it discover at closing that the equity they were planning to hand the owner isn't there.

omar_haddad · Answer

The payoff point is the one that bit people I know. Reinstatement amount and payoff amount are two different numbers and the owner will often quote you the smaller one because that's the one the lender's letter shouted at them.

Also, girder, if you're coming from construction, resist scoping the rehab off a driveway conversation. These houses have deferred everything. Someone who couldn't pay the mortgage for eight months didn't fix the roof leak either.

Is a notice of default the same thing as pre-foreclosure

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