Which of the following terms refers to a clause that allows the lender to accelerate repayment upon default?

Which of the following terms refers to a clause that allows the lender to accelerate repayment upon default?

• A. Usury
• B. VA Loan
• C. Acceleration Clause
• D. Acknowledgement

Answer: (C)

The term that refers to a clause allowing the lender to accelerate repayment upon default is an acceleration clause. This specific provision in a loan agreement enables the lender to demand the full outstanding balance of the loan if the borrower fails to meet the terms of the contract, such as missing payments. It serves as a protective measure for lenders, ensuring they can recover the loan amount quickly in the event of a default, thereby minimizing their financial risk. In the context of mortgage loans, this clause is particularly important because it clarifies the lender's rights and the borrower's obligations in situations where the borrower may no longer be able to fulfill their payment responsibilities. Understanding acceleration clauses is essential for both lenders and borrowers to navigate the risks associated with mortgage loans effectively.

The term that refers to a clause allowing the lender to accelerate repayment upon default is an acceleration clause. This specific provision in a loan agreement enables the lender to demand the full outstanding balance of the loan if the borrower fails to meet the terms of the contract, such as missing payments. It serves as a protective measure for lenders, ensuring they can recover the loan amount quickly in the event of a default, thereby minimizing their financial risk.

In the context of mortgage loans, this clause is particularly important because it clarifies the lender's rights and the borrower's obligations in situations where the borrower may no longer be able to fulfill their payment responsibilities. Understanding acceleration clauses is essential for both lenders and borrowers to navigate the risks associated with mortgage loans effectively.