Mortgage Foreclosure & Refinance Resource

Acceleration clause is a part of an agreement that gives a lender permission, under certain conditions, to demand the total outstanding balance or demand additional collateral under certain circumstances, such as failure to make payments, bankruptcy, nonpayment of taxes on mortgaged property, or the breaking of loan stipulation.  If an outlined event occurs the lender can  make the entire principal amount due.

Most loans have an acceleration clause that takes effect when a buyer assumes a seller’s mortgage and monthly payment schedule. Less often, the clause is used when a home owner misses payments or breaks a term that was agreed to in the contract.