Mortgage Contract Default
Any breach of the mortgage contract on the part of the borrower constitutes default. The most common default occurs when the borrower fails to make the required monthly payments.
There could be other actions on the part of the borrower that could cause the lender to declare the mortgage contract in default. For example, if the borrower failed to purchase and maintain adequate insurance, the lender could declare a breach.
What is a mortgage default?
A mortgage is a written contract between a borrower and a lender. The agreement allows the borrower to purchase a property while pledging it as security for the loan. The lender places a lien on the property to guarantee the receipt of the monthly payments. A default is any nonperformance of the contractual obligations created in the mortgage agreement.
The mortgage contract spells out what constitutes a breach. It is important for borrowers to read and understand their mortgage contract so they know when they are in default.
