What is a mortgage default or default?

 
A mortgage default is when a borrower has not made a scheduled debt payment (either principal and interest or interest only) according to the debt contract.  Or a default can also result from failure to cure a loan covenant (condition) of the debt contract.  A default is the failure to pay back a loan, which may arise from the debtor’s inability or unwillingness to pay their debt.  A default can occur with bonds, mortgage loans, or promissory notes.
 
There are two types of default:  a debt service default and a technical default.  A debt service default results from a borrower not making an on time payment for principal, interest, or just one of these.  A technical default results from a loan covenant being violated.
 
A default should be distinguished from the terms insolvency and bankruptcy by:

1. Default means the debtor has not paid a debt, which they were required to have paid by contract.
   
2. Insolvency means that the debtor is unable to meet their current debt obligations usually due to cash flow problems.
   
3. Bankruptcy means that the court supervises the financial affairs of those who are insolvent or in default.

 
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