Because the country is seeing an unprecedented amount of foreclosure, I thought it might be a good idea to cover some of the basic terms and concepts of foreclosure. One of these concepts that every Realtor and Homeowner should be aware of is the Acceleration Clause.
The Acceleration Clause can be found in most all real estate mortgage agreements and what it says is, the lender has the right to demand for payment of balance in full if certain circumstances come to rise.
The thing to remember here is that most Acceleration Clauses include not only principal but interest as well, so it is truly the balance in full.
Now, your mortgage agreement will outline the details as to when the lender can Accelerate your loan however, some common reasons that most all of us are under do exist, and they are......
- Default: This is when you fail to make a payment. Keep in mind, default typically is defined as any missed payment. Default doesn't mean you have to be three months behind. Default is the most common reason for a lender to enforce the Acceleration Clause and the Acceleration Clause is most widely used in cases of Default because it speeds up the foreclosure process.
- Bankruptcy: Most lenders will Accelerate the loan when you file for Bankruptcy.
- Fraud: If you are suspected of Mortgage Fraud lenders can Accelerate the loan.
- Unpaid Taxes: Don't pay Uncle Sam and you can expect the loan will be Accelerated.
Other reasons a lender can Accelerate the loan do exist however, they aren't as common as the ones I have outlined above. If you want to know the details of your specific mortgage, you need to read over your agreement.
The opinions expressed in my blog, are just that...my opinion. I am not an Attorney so do not consider my opinions as legal advice. As a Realtor, I obviously have a working knowledge of common real estate practices however, as it pertains to law, I suggest you speak with an Attorney, which I am not!
Comments(0)