Final answer:
A property owner defaults on the promissory note when they fail to pay their mortgage loan. The 2007 mortgage crisis led to a spike in defaults due to falling property values and banks' practices of securitizing loans.
Step-by-step explanation:
When a property owner defaults on a mortgage loan, they have failed to meet the terms outlined in the promissory note. The promissory note is a legal document that outlines the borrower's promise to repay the loan to the lender. During the mortgage crisis that began in 2007, many property owners found themselves in a situation where they could not maintain their mortgage loan payments, leading to defaults. This was exacerbated by a drop in property values, which meant many homes were worth less than the amount borrowed, and changes in banking practices where loans were securitized and sold on the secondary loan market, detaching lenders from the financial risks of defaults.