Default
Failure to meet the legal obligations of a loan, most commonly by missing scheduled payments.
Default doesn't usually happen on a single missed payment, most mortgage documents define default after a specified number of consecutive missed payments, typically three. But the path to default starts with the first missed payment, and the longer it goes uncured the harder recovery becomes.
Once a loan is in default, the servicer can begin acceleration, declaring the entire balance immediately due. From there, foreclosure proceedings can start, governed by state law and the procedures spelled out in the loan documents.
Default also covers non-payment defaults: failure to maintain required insurance, failure to pay property taxes (if not escrowed), or transferring the property in violation of a due-on-sale clause. These are less common but real triggers in specific situations.
Related terms
Other terms you'll see alongside Default
The legal process by which a lender takes possession of and sells a property after a borrower defaults on the mortgage.
A temporary pause or reduction of mortgage payments granted by the servicer when a borrower faces hardship.
A permanent change to the terms of an existing mortgage to help a borrower facing long-term hardship stay in the home.
The company that collects monthly payments, manages the escrow account, and handles borrower service on a loan after closing.
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