When banks foreclose on a home, homeowners are often confused by the language used in the various legal documents. One of the terms that causes the most confusion is “default”. There are at least two different ways this word is used during the foreclosure process, neither of which have good implications for borrowers most of the time. However, homeowners need to know how the bank will use the word.

The first way banks use the word “default” is when they claim that homeowners are in default of the mortgage contract. Borrowers sign the mortgage or deed of trust to establish the terms under which they will make payments to the lender or utility company to keep the contract in force. Once payments are missed, the payment terms of the contract have been breached and the owners are in default.

So, a breach of a mortgage contract means that the homeowners have failed to meet one of the conditions to delay their part of the agreement. While there are other ways to default on a loan, the most common breach of contract is when borrowers don’t make payments on time and the lender begins the foreclosure process. In the lawsuit documentation, the lender states that the owners are in default.

The second way banks use the word “default” is when they file a motion with the court during foreclosure. This motion may be called a default order, a default judgment motion, or some other similar term. For the purposes of this article, the motion will be called a “default order.” However, homeowners should be aware that the same type of legal document may have a different name in your state.

A default order means that the bank is trying to obtain a foreclosure judgment against the homeowners without going through a trial or other court proceedings. Of course, this cannot be done under any circumstances, but it is often done in foreclosure cases due to the uninformed nature of most borrowers. The bank can start a few steps in the process and then get a judgment without having to prove its case.

This is usually done when homeowners fail to appear at an initial foreclosure hearing or fail to file an answer to the lender’s complaint. The courts understand that the silence of the borrowers means that they do not object or argue with the bank’s claims of breach of the mortgage contract, nor do they question the ability of the lender to bring a foreclosure in court in the first place.

Therefore, if the owners did not file an answer to the complaint or did not appear or request a hearing on the matter, then the bank will request that the court enter a default judgment order. Most courts will have little trouble entering this order, believing that the owners had enough time to hire an attorney, obtain a law degree, or learn court procedures competently enough to file an answer.

However, a default order is not the end of the line, as landlords can try to have the default judgment vacated or dismissed. This requires that they present the corresponding motions in a short time. If the order to vacate the default judgment is granted, the bank will have to pursue the lawsuit more carefully. You will not be able to rely on the owner’s ignorance of the process to sell the house at a foreclosure auction.

it is a minor tragedy that most foreclosure cases are decided by default. This is because many borrowers do not file an answer or do not show up for foreclosure hearings. Therefore, it is important that more borrowers educate themselves on at least some basic steps they can take to make it much more difficult for the bank to declare them in breach of contract and then obtain a default judgment against them.