Default Foreclosure: Demystified

Foreclose is a confusing term, mostly in the case of bank customers. The term is widely used in many legal documents esp. in the loan forms. The confusion increases when the term default is used. This term is used in various (at least 2) methods in the foreclosure procedure, in either case it is to benefit the banker over the borrower. However borrowers must know to what extent the term will be used by bank.
While getting loan, the borrower signs in the deed of trust. The payment is paid according to the conditions in contract. Once in a while if payments are skipped, it is clear breach of conditions in the contract. The bank now declares that the owners are in default of mortgage contract. This is a method where bank uses the word default.


Default of mortgage contract means breach of a contract by failing to satisfy a condition in the contract. The most common way to fall in default is by skipping a payment, while there are other possible ways too. In such case the bank files a lawsuit against borrower stating that the owners are in default.
The word default also comes in action when a motion is filed against borrower by the bank during the process of foreclosure. The motion can be specified differently in legal documents like motion of default, order of default etc... Borrowers must be aware of this while handling legal documents.
The action of the bank trying to get verdict against the borrower for foreclosure without any court procedure or prosecution is called as motion of default. This is possible only when the status of borrower is unknown. In such cases the bank can get a quick judgment without proving the case. This is another way where the term default is effectively used.
This is usually done if the borrower does not appear at the day of hearing or answer the prosecutors complaint. The extended silence from the borrowers side triggers court to conclude that the borrower has no problem with the banks complaint of breaching contract against them; neither have they wanted to appeal against the banks power to bring a foreclosure to court.


The bank will then request the court for a default judgment in such cases. Many courts have prerequisites before passing this order; they check whether borrowers were given sufficient time to consult a lawyer or allowed to practice court routines with competence of filing an answer.
Though the court has granted motion of default, the borrower can still dismiss the default judgment provided he has filed required motions to the court in time. If the borrower succeeds then the bank must carry on with care. From now the bank can not sell the house by ignoring the borrower.
Besides the fact that there can be many different outcomes for a foreclosure case, many cases end in the banks favor. This happens because many borrowers do not show up for hearing or file an answer for foreclosure case against them. Borrowers must learn few basic steps that can prevent default judgment against them.