If you fail to comply with the terms of the promissory note or mortgage (or deed of trust) that you signed when taking out your home loan, you’re considered in “default.” In this article, you'll learn what types of contract violations constitute a default and the consequences of defaulting on your loan.
The most common type of default is falling behind in the required monthly payments. But breaching other terms in the loan contract is also considered a default. For instance, you’ll likely be in default if:
Once you default on the loan, the lender can demand that you immediately repay the entire outstanding balance, which is called “accelerating the debt.” However, sometimes you’ll get a notice before the loan is accelerated, which will give you the chance to fix or “cure” the default.
If you don’t repay the full loan amount—or cure the default—the lender can foreclose. But under some circumstances, federal law requires the servicer to hold off for 120 days before starting a foreclosure. (To get information about foreclosure laws in your state and find links to more detailed articles covering state foreclosure procedures, see our Key Aspects of State Foreclosure Law: 50-State Chart.)
If you’re facing a possible foreclosure because you’ve defaulted on your home loan, consider talking to a foreclosure attorney. If you have questions about ways to avoid a foreclosure, like by getting a mortgage modification, contact a HUD-approved housing counselor.