DEFAULT (Step 1), as it pertains to your mortgage. This means that you violated one of the terms contained in your Deed of Trust. The Deed of Trust was the twenty or thirty page document that you signed at closing. It is the legal instrument that conveys an interest in your home to your lender. Think of it as the document that lets the bank hold your home as collateral in the event that you fail to follow the terms of the Deed of Trust, e.g. a DEFAULT.
The most usual way homeowners find themselves in DEFAULT is by failing to make their mortgage payments on time.
If you find yourself in DEFAULT, your first line of defense is to do a proper evaluation of your financial situation. If by chance it is not possible to catch-up with your late mortgage payments, contact your lender and discuss any and all Stop Foreclosure options that they may have for you. Read the section on this website entitled "Stop Foreclosure" for further explanation of possible options or solutions to your DEFAULT.
Let’s assume that you are in DEFAULT and you haven’t paid your mortgage in two months, Maryland’s foreclosure law says that a lender cannot institute a foreclosure action against you until you have fallen 90 days behind.
Look at DEFAULT this way: If your mortgage is due every month on the 1st day of each month and you fail to pay it on the first, you are in default on the 2nd day of the month. Contrary to popular belief, the lender does not have to abide by the grace period before considering your loan in DEFAULT. Read on to understand what happens after DEFAULT.
Step 1: Default