In real estate, delinquency means the failure to make a payment as required by law or responsibility. An individual or a corporation may become delinquents when they are bound in a contract to make timely payments against a loan, such as mortgage.
Another example of delinquency is when a land or property owner fails to pay taxes to the government. Most of the time, delinquent mortgages or taxes are enforced by lenders or the government in the form of a “late fee”.
Delinquency can be a ground for foreclosure or forfeiture of the property to be executed by the lender or government if payment is still not made within the grace period.
Delinquency vs. Default
A delinquency occurs as soon as the debtor misses a scheduled payment to a mortgage. On the other hand, a default occurs when a debtor fails to pay the loan as stated in the contract, which will require the creditor to reclaim the property in lieu of repayment. Although in general, the declaration of a default depends on the creditor and the loan type.
Buying a Preforeclosure Home
Most properties for foreclosure are on defaults. Although buying a preforeclosure home is not a bad thing, it may not be wise for first-time home buyers, as some investors usually attempt to make deals in favor with home sellers, and may or may not be legal. However, there are states who have laws that will regulate the investors’ obligations when selling properties.