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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.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.


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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved


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.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.


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.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.


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.

The Complete Real Estate Encyclopedia by Denise L. Evans, JD & O. William Evans, JD. Copyright © 2007 by The McGraw-Hill Companies, Inc.


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.

The Mortgage Encyclopedia. Copyright © 2004 by Jack Guttentag. Used with permission of The McGraw-Hill Companies, Inc.
References in periodicals archive ?
Unlike Guembel and Sussman (2009), Drazen (1998) studies the case in which the government can selectively default on local or foreign debt and foreign debtholders can punish a defaulting government.
Probabilities of defaulting for more than one period can then be conveniently computed from this transition matrix using simple matrix multiplications.
If the market properly assesses risk and no orthogonal equity systematic risk component exists, speculative-grade debt yield spreads should be comparable to investor losses from defaulting bonds.
If at this time the high fixed-rate obligors are defaulting, there might not be sufficient liquidity in the deal to pay the swap counterparty and the rated liabilities.
In essence, an additional settlement obligation (ASO) is calculated for each participant that dealt that day with the defaulting member to make up that member's unpaid obligation, and the participants are given a reasonable period of time to cover this ASO.
Contrary to what popular discussions often imply, defaulting on a federal student loan is far from a terminal status.
The FICO Labs team built strategic default analytics to test the ability to rank-order both current and delinquent borrowers by their likelihood of strategically defaulting on their mortgage.
This was again somewhat surprising since the majority of 127 defaulting issues with prices were senior secured (17) or senior unsecured (58), and less than forty percent of the issues were subordinated.
The traditional method of measuring annual default rates is based on comparing the dollar amount of all issues defaulting in a given year divided by the dollar value of all bonds outstanding as of some point during that year.
Office defaults handily outpaced all other property types with 64 loans defaulting totaling $1.4 billion (53%) in defaults.
Bush administration officials lauded the progress, citing increased accountability measures by colleges and lenders to monitor those at risk of defaulting. "This year's rates show that accountability for results work," Secretary of Education Rod Paige said.
In the corporate sector, Moody's reports that U.S.-based issuers were the primary source of last year's bond defaults, with 50 issuers defaulting on a total of $8.8 billion.