A notice of default is a public notice that a borrower is behind on their mortgage payments. (Also known as being in default on their loan.) It’s typically filed with a court and regarded as the first step in the foreclosure process. If the borrower comes to a payment agreement with the lender or pays the outstanding balance within 14 days, the lender will stop foreclosure proceedings. However, if the borrower does not take these steps, the default is registered with the credit reporting agencies and the lender will continue proceedings to repossess the home.
Related terms: Default, Foreclosure