By Diana Olick, CNBC Real Estate Reporter

NEW YORK ( CNBC) -- It's the next big shoe to drop in the robo-signing foreclosure scandal. Call it part two.

We already know some banks halted foreclosure sales nationwide in October when it was discovered that servicers took short cuts, so-called "robo-signing," in the foreclosure sale process in judicial foreclosure states -- which account for about half the country.

Now it appears they may have done the same thing in a different part of the process, the Notice of Default, which takes place in the other half of the country -- i.e., the non-judicial states. This happens before the foreclosure sale.

(Judicial foreclosures are those that are processed through the courts, whereas non-judicial foreclosures are processed without court intervention.)
More from CNBC
Housing Double-Dip More Likely
Five Ways Debt Is Good for You
The Mortgage Industry's Reputation Challenge

A Notice of Default is the notice sent out in non-judicial foreclosure states that alerts the borrower that the official foreclosure process has begun. It is also filed with the county recorder's office and allows the notice of foreclosure sale to be published.

What's so important is that this is the process in California, Nevada and Arizona (AZ is both judicial and non-judicial), which have three of the top four foreclosure rates.

Last week an article from American Banker titled "New Point of Foreclosure Contention: Default Notice" circulated widely among the folks who follow the mortgage mess. It talked about how several lawsuits are now being filed contending that the Notice of Default process was flawed and the foreclosures therefore invalid.

As this article was circulating, a source pointed me to the fact that Notices of Default had dropped off dramatically since October, especially in California. In fact, Foreclosure Radar shows it quite clearly. Foreclosure Radar's Sean O'Toole wasn't ready to say the banks had cut off Notices of Defaults but did say that "given the issues raised, we certainly wouldn't be surprised to see a slowdown of foreclosure activity in non-judicial states."

So we contacted Bank of America ( BAC), and spokesman Dan Frahm said:

"As part of our voluntary, comprehensive review of the modification and foreclosure process we launched in October of 2010, we did conduct a review of the Notice of Default process. As a result, we stopped the NOD process in the non judicial states while we completed that review and, later, implemented and tested the resulting process improvements. We announced in December our foreclosure restart -- starting with vacant and non-owner occupied properties -- and ramp up of that volume continues, as does the related NODs."

If you liked this article you might like

How to Make a Deal Like Billionaire Investor Warren Buffett

Here's How to Invest Like a Billionaire

How to Invest Like Billionaire Warren Buffett

How to Live Just Like Billionaire Warren Buffett

Bank Stocks Move Higher Ahead of Federal Reserve Meeting