Definition

• A Notice of Default (NOD) is a document that a lender sends to an individual to let the owner know she hasn't made payments by a pre-agreed date. It stimulates the individual who has taken out the loan to provide appropriate money as owed to the lender.
  
  

Association

• Lenders usually associate a Notice of Default with large property, such as a home. In fact, some definitions of Notice of Default such as the one from Realty Trac specifically reference real estate. However, a lender technically may send a Notice of Default for any loan, including those that people take out for items that include cars, furniture or education.
  
  

NOD Vs. UD

• Because some definitions of Notice of Default refer to real estate, some people confuse a Notice of Default with an Unlawful Detainer (UD). An UD is different from a Notice of Default in that an the UD does not involve a lender and usually involves a rented, not owned, property. The UD notifies the person renting the property that she is late on rental payments and that the the person who owns the property may take action to reclaim that property.
  
  

Foreclosure

• As shown in the definition of NOD by Realty Trac, NODs are the first step in foreclosing on a property purchased via loan. However, if a property owner complies with requirements that the lender sets in the NOD, then the owner may put the loan account back in good standing and stop foreclosure proceedings.
  
  

Contents

• A NOD usually states the name and contact information of the lender and the property owner. It briefly outlines the terms of the loan agreement and explains how the property owner has not met those terms. The NOD also includes explanation of how the property owner may rectify the default, such as paying the loan in full. The most negative content of a NOD is the warning of potential legal action if payments aren't made.
  
  

Handling NOD

• A person who receives an NOD usually receives one because she is encountering financial difficulty. As shown by the Los Angeles County Department of Consumer Affairs, a person may handle an NOD by talking with the lender, such as negotiating an extended loan period with lower payments or a different payment date. In addition, the Department of Housing and Urban Development (HUD) has some programs that provide financial assistance to homeowners in default.