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GLOSSARY

Canadian Financial, Real Estate and Mortgage Glossary

How often this word is used
 
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50% - Moderately

Default


Synonyms:deficiency, disregard, failure, lack, lapse, miss, neglect
Filed Under: financial-banking, mortgages
Tags: banking, mortgage
 

Definition of default

default
1. The condition that occurs when a consumer fails to fulfill the obligations set out in a loan or lease.

Related Terms and Acronyms:

  • bad credit loan   A loan taken out by someone with bad credit.
  • mortgage acceleration clause   A provision of a loan agreement that lets a lender demand payment of the full balance under specified circumstances, such as sale of the property, default or refinancing. Not commonly used in Canada and/or Canadian lenders.
  • mortgage disability insurance   Insurance that covers mortgage payments if a policyholder becomes disabled.
  • mortgage insurance   Insurance that protects a lender if a homeowner fails to pay off his or her mortgage.
      ➥  CanEquity offers mortgage insurance.
  • notice of default (NOD)   The step in the foreclosure process where the lender informs the court that the borrower is in arrears.
  • power of sale   The right of a mortgagee to force the sale of the property without judicial proceedings should default occur.
  • repayment plan   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   The taking back of property after a borrower has stopped making payments.
  • restructured loan   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 mortgage   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.

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