Question

Which of the following is the most accurate description of what an acceleration clause in a mortgage instrument allows a lender to do in the event of default?

A. Increase the interest rate on the loan.
B. Charge the borrower a late fee.
C. Require the borrower to pay the entire remaining balance of the loan immediately.
D. Foreclose on the borrower's home.

Answer 1

An acceleration clause in a mortgage instrument allows a lender to require the borrower to pay the entire remaining balance of the loan immediately in the event of default.

Step-by-step explanation:

An acceleration clause in a mortgage instrument allows a lender to require the borrower to pay the entire remaining balance of the loan immediately in the event of default.

This means that if the borrower fails to make their mortgage payments as agreed, the lender has the right to demand full repayment of the loan.