Mortgage is defined as a legal agreement that is drawn between a building, a society, a bank, etc., and the borrower of money in exchange for taking the title of the property of the borrower until the borrower repays the principal amount along with interest. If the borrower fails to perform the same, the title will of the property will lapses to the lender.

Mortgage default occurs when the borrower fails to pay the borrowed amount within a stipulated time period. This can be at the end of the entire repayment procedure or can take place intermediately.

Handling mortgage default
Mortgage default as mentioned above is the failure to pay a certain amount within a stipulated time period. This can lead to foreclosure but not immediately. Lenders follow a procedure where they wait for a period of 200 days from the date of default for the completion of the payment before they move in for the foreclosure.

This can be handled if one follows the following essential steps that ensure the same:

• Do not give up: Many people think that as soon as a default occurs, there is nothing that they can do and that their property will reach the foreclosure stage. Giving up at the first step itself bears no fruit because 200 days of the time that the lender provides is more than enough to jump back up from the default. One should ensure that many payments have not defaulted after the first one.
• Contact the lender: Even though the lender puts a cap on the days within which one can jump back, contacting them and taking their suggestions upon the matter is important. One should always explain their situation to the lender so that everyone stays on the same page. One can even explain the reason behind the default which could help in the lender extending the repayment time period.
• Insurance: If the mortgage default is due to a person losing their job, there are a variety of insurance policies that cover mortgage payments due to unemployment. This helps as it gives the person enough time to look for other jobs before foreclosure.
• Cash flow: As soon as one defaults on their mortgage, it is essential that they should be really quick in making certain decisions. One such decision is to increase one’s cash flow at the earliest. Mortgage default is a warning signal and if the cash flow has significantly increased, the possibility of repayment within the stipulated time is high.
• Foreclosure: If nothing can be done at all in case of a mortgage default, then one inevitably has to go for foreclosure of their property. Foreclosure is a bad taste in the mouth because not only does it take the property away from the person but also the records of the banks (if they are the lenders) will have the failure of one’s repayment for up to seven years. This implies that one cannot apply for future loans easily.