- A home loan in which the borrower has failed to make payments on time, as specified in the loan agreement.
failure to pay, lapse, balance due, arrears, unpaid bill, neglect mortgage payment
Related Terms and Acronyms
- Credit Risk — Definition,
- The risk of loss assumed under a financial contract that a borrower or a counter-party to a loan or other credit-related contract may default or fail to fulfill its obligations.
- Demand Loan — Definition,
- A loan that must be repaid in full, on demand.
- Forbearance — Definition,
- Delaying foreclosure, usually because the borrower has arranged to pay the amount in arrears.
- Foreclosure — Definition,
- The legal process by which a borrower in default under a mortgage is deprived of his or her interest in the mortgaged property. This usually involves a forced sale of the property at public auction with the proceeds of the sale being applied to the mortgage debt.
- Guarantee — Definition,
- An enforceable warranty on the promise of quality of a product or formal promise by one person to take responsibility for the debts or obligations of another person if that person fails to meet them.
- Mortgage (mtg) — Abbreviation, Important,
- A mortgage is a contract stipulating a specific real property, typically a residence or building, as collateral for a loan. The mortgage incurs a rate of interest that varies according to term and other features.
- Mortgage Payment — Definition, Important,
- A periodic payment used to pay off a mortgage's principal and interest.
- Notice of Default (NOD) — Acronym, Important,
- The step in the foreclosure process where the lender informs the court that the borrower is in arrears.
- Penalty — Definition,
- In mortgage terms, a penalty is a set rate or length of time the penalty will be charged based on the remaining loan amount. The penalty is usually three months interest or interest rate differential.
- Repayment Plan — Definition,
- Modification of an existing loan after the borrower has been delinquent. Often used when the borrower misses payments but the lender does not foreclose.
- Repossession — Definition,
- The taking back of property after a borrower has stopped making payments.
- Restructured Loan — Definition,
- A mortgage in which basic terms -- such as interest rate, term and monthly payment -- have been changed to prevent foreclosure. Not a normal practice in Canada.
- Sub-prime Borrower — Definition,
- A borrower with a less-than-perfect credit report due to late payments or a default on debt payments.
- Sub-prime Mortgage — Definition, Important,
- A mortgage loan that is granted to a borrower who is considered sub-prime (has a less-than-perfect credit report). Sub-prime borrowers have either missed payments on a debt or have made late payments. Lenders charge a higher interest rate to compensate for potential losses from customers who may default on the loan.