Question

In: Economics

Which of the following best explains the acceleration mortgage clause? The clause that allows the lender...

Which of the following best explains the acceleration mortgage clause?

The clause that allows the lender to charge points to the borrower.

The clause that allows lenders to call the entire balance due and payable immediately if the borrower defaults on the loan.

The clause that reverses the amortization of the loan.

The clause that changes the mortgage payments from once a month to once every two weeks.

Solutions

Expert Solution

Ans: Acceleration mortgage clause allows lenders to call the entire balance due and payable immediately if the borrower defaults on the loan.

This clause let the lender require the repayment of the loan before the standard or given time. The borrower needs to pay all the outstanding loans if any of the clauses are not fulfilled by the borrower. This gives the lender an edge in demanding loan repayment.


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