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Related to Loan Defaults: defaulting


The failure to make timely payment of interest or principal on a debt security or to otherwise comply with the provisions of a bond indenture. A breach of a covenant. In context of project financing, a technical default signals a project parameter is outside defined or agreed limits or a legal matter is not yet resolved.


The failure to make payments on a debt. One may default on any debt, such as a mortgage or a bond. Default is a very serious matter and may entitle the lender or bondholder to take possession of one's assets in order to recover the amount lost in principal and interest payments on the debt. Default also has a negative impact on one's creditworthiness in the future.


The failure to live up to the terms of a contract. Generally, default is used to indicate the inability of a borrower to pay the interest or principal on a debt when it is due. See also technical default.


If a person or institution responsible for repaying a loan or making an interest payment fails to meet that obligation on time, that person or institution is in default.

If you are in default, you may lose any property that you put up as collateral to get the loan. For example, if you fail to repay your car loan, your lender may repossess the car.

Defaulting has a negative impact on your credit history and your credit score, which generally makes it difficult to borrow again in the future. In fact, failure to pay on time is the single most important contributor to a poor credit history.

A bond issuer who defaults may not pay interest when it comes due or repay the principal at maturity, or both.


The failure to meet one's obligations in a timely manner. There are several important concepts relating to defaults in the real estate field:

• Leases and mortgages often differentiate between monetary defaults, such as failure to pay money when due, and nonmonetary defaults such as a failure to provide proof of insurance or copies of monthly financial statements. If so, there will be different notice provisions and grace periods for each.

• Unless a sale contract contains language that “time is of the essence,” or one party has made the other aware that time is critical, then a court will ordinarily award a purchaser a reasonable amount of time to complete closing, even if it is past the contract date.

• Some states have statutes allowing collection of attorneys' fees when there has been a default in the contract. Other states require specific language in the contract allowing for collection of attorneys' fees.


Failure of the borrower to honor the terms of the loan agreement.

Lenders usually view borrowers delinquent 90 days or more as in default.

See Payment Problems.

References in periodicals archive ?
About Custodia Financial Headquartered in Dallas, Texas, Custodia Financial provides innovative programs preventing loan defaults on 401(k) and other defined contribution plans.
President and CEO SME Bank Ltd Naseer Durrani told on Sunday, that percentage of loan defaults in Lahore had risen to 51% while the overall percentage was 21%.
All share an explicit and common reliance on statistical methods for estimating the probability of a loan default, for example.
Unlike a standard Phase I site assessment report, environmental insurance allows a loan officer to assure his institution's shareholders that if such a loan defaults, the bank's bottom line will not be affected by remediation and liability claims.
An issue that has been increasingly engaging the attention of the entire nation, the issue of excessive, and rising, level of loan defaults, which is one of the most disturbing aspects of banking in Pakistan.
Nonetheless, through its appeal, COC has taken a lead to reform federal student loan default regulations.
Because the 401(k) loan default rate in that sample (10 percent) was associated with an unemployment rate that is roughly half of today's unemployment rate (4 percent versus 8 percent), and because 401(k) loan default rates are correlated with unemployment rates, Litan and Singer project significantly higher 401(k) loan default rates since the onset of the Great Recession in late 2008.
The current industry protocol that allows $billions of involuntary loan defaults annually is simply unacceptable.
He suggested that a representative of the FPCCI be included in the Board of Director of SME Bank to recommend loans and said that percentage of loan default would be controlled.
According to a central bank official in Brazil, loan defaults could drop even though consumer-loan defaults in Brazil are at a 30-month high.
Environmental insurance protects lending institutions from financial loss and liability when a loan defaults and real estate collateral is contaminated.
Increasingly successful loan modifications and rising new issuance will not be enough to put a stop to rising CMBS loan defaults, which are likely to exceed 12% by the end of this year, according to Fitch Ratings in its latest annual fixed rate conduit loan default study.