(8) Clauses In A Mortgage

Question 1

Declares that if the mortgagor was to ever become delinquent in payments, that the entire balance of the mortgage note become immediately due and payable by foreclosing the property

Answer 1

Acceleration Clause

Question 2

Demands full payment of the mortgage balance if the property is sold or the title transfers to a third party. This protects the lender from a third party with any credit risks

Answer 2

Alienation Clause (Due-on-Sale)

Question 3

Usually written into the agreement permitting the lender to increase or decrease the agreed-upon-interest-rate

Answer 3

Escalation Clause

Question 4

Usually used in junior or second mortgage to differentiate that a certain mortgage is subordinate to other(s). Allows first mortgage to be paid off first.

Answer 4

Subordination Clause

Question 5

Terminates the rights of the lender when the debt is paid off

Answer 5

Defeasance Clause