What constitutes a substantive default in a mortgage?

A substantive default in a mortgage typically refers to a significant failure or breach of the terms of the mortgage agreement, particularly concerning the payment obligations. In this context, missing three consecutive payments often qualifies as a substantive default, as it indicates a serious inability to meet the financial obligations that were agreed upon at the outset of the mortgage.

While one missed payment may be concerning, it often does not reach the threshold of a substantive default because borrowers may have the opportunity to rectify the situation with a single late payment. Similarly, violations of terms unrelated to payment might not constitute a substantive default unless they are serious enough to warrant action by the lender. Failing to make a payment at the end of the term is specific to the conclusion of the mortgage agreement and may not apply to the ongoing payment obligations outlined during the mortgage.

By establishing that three missed payments indicate a clear and ongoing inability to fulfill the repayment obligations, the correct answer highlights how the severity of default is assessed within mortgage agreements.