Shadow Default

Coined in 2023. When someone in Canada cannot pay their mortgage and they haven't defaulted by banking standards. However, their loan balance is increasing and amortization is being pushed out because they cannot afford to pay (negative amortization). The default is happening in the shadows as it is not being picked up by regulators or the public. The person is in a shadow default.

Tom took out that variable rate mortgage in 2021 when he creamed his shorts to buy a house. He is now in shadow default as rates went up and he can't afford the mortgage.