What is an “Acceleration Clause”?
An acceleration clause in a mortgage contract allows the lender, in certain circumstances, to demand that the entire balance of the loan be repaid in a lump sum immediately. This clause may be triggered, for instance, if the borrower defaults on a regularly scheduled payment. Generally, the lender is required to give notice to the borrower before acceleration is invoked. Specifically, the buyer is notified of the default, the action required to cure the default, and the date by which the default must be cured. If the default is cured, the mortgage is reinstated. If it’s not cured, the lender may invoke a statutory power of sale and begin foreclosure proceedings. (See due-on-sale clause below.
