In securitisation, default happens when a
borrower stuffs up a payment on a
loan or other debt obligation that is part of the securitisation. When this happens, the investors in the securitisation might lose money.
There are a number of factors that can lead to
default in securitisation, including:
- The borrower's financial situation might get worse, making it difficult for them to make payments.
- The borrower might experience a change in circumstances, such as a job loss or a medical emergency, that makes it difficult for them to make payments.
- The borrower might simply choose not to make payments.