What must be disclosed when a borrower defaults on a loan?

When a borrower defaults on a loan, it is essential to disclose the legal implications of defaulting. This is important because borrowers need to understand the consequences of their actions. Defaulting can lead to severe repercussions, including but not limited to foreclosure, negative impacts on credit scores, and potential legal actions from the lender to recover the owed amount. Providing this information ensures that the borrower is fully informed about the risks they are facing and the serious nature of failing to meet their repayment obligations.

In contrast, while knowing the total amount paid so far, the name of the mortgage note holder, and the payment plan for the next year can be important, these elements do not carry the same urgency or relevance as understanding the legal ramifications of a default. The focus in this context is primarily on the long-term consequences of defaulting, which is why detailing those legal implications is critical for borrower awareness and decision-making.