Why did you receive the default letter from your lender? I think you know.
You stopped paying your mortgage, taxes or both!
In other words you did not pay what you owed the lender. You broke a contract. How would you feel if someone owed you money and he didn't pay you back? Hurts, doesn't it?
Now that we've gotten that out of the way, how do you deal with the problem? The clock is ticking.
Possible actions: 1. Ignore the default notice and wait until the "auction" to panic. 2. Call the bank and ask them to renegotiate the terms of the loan and delay the auction. 3. Call a Realtor and put the house up for sale. 4. Pack your things and move away; let the house go.
Notice: The common theme here is: "lose your house, your home"
The truth is that if you don't renegotiate with the bank and then keep up those payments, you will eventually "lose your house". Why not do that on your own terms? Turn lemons into lemonade.