Real Estate Finance
A mortgage provision that allows the lender to demand full repayment of the remaining loan balance if the borrower defaults.
An acceleration clause is a standard provision in most mortgage agreements. When the borrower breaches the terms, typically by missing payments. The lender can declare the entire unpaid balance immediately due and payable. Without this clause, the lender would only be able to sue for each missed payment individually. Acceleration is the legal mechanism that enables foreclosure: once the full balance is due and the borrower cannot pay, the lender initiates foreclosure proceedings.
Exam Tip
Acceleration makes the ENTIRE balance due, not just the missed payments. It is the prerequisite to foreclosure.
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Real Estate Finance
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