Definition
Default occurs when a borrower fails to meet the legal obligations of a loan contract, typically by missing scheduled payments for a specified period. For most mortgages, default begins after 90-180 days of missed payments. Default has serious consequences including damage to credit scores, late fees, collection efforts, and potential loss of collateral through foreclosure or repossession. A default remains on a credit report for up to seven years.
Example
Mortgage Default Timeline
After missing your first mortgage payment, you may incur a late fee. At 30 days late, the lender reports the delinquency to credit bureaus, damaging your credit score. At 90 days late, the loan is considered in default. Foreclosure proceedings may begin at 90-180 days. The longer you wait to address missed payments, the harder and more expensive it becomes to cure the default.