Final answer:
The borrower has been recorded as being in default after missing two monthly payments, potentially facing foreclosure and, in severe cases, bankruptcy as seen in past housing market crises.
Step-by-step explanation:
When the homeowner failed to make two monthly payments on his trust deed, the lender's response was to record a notice of default.
This action signifies that the borrower has officially been acknowledged as being in default on the loan, which is the first step in the potential foreclosure process.
Historical events such as the financial crisis of 2008 highlight the implications of rising delinquency and late payments in the housing market.
At such times, lenders may tighten credit, and homeowners, facing declining property values, can struggle to meet mortgage obligations, leading to possible foreclosure and, in worst-case scenarios, bankruptcy.