A New York high-cost home loan in 2026 lets the lender accelerate at its sole discretion. May the contract give the lender a sole-discretion right to accelerate?
Correct Answer
C) Unlawful: no sole discretion acceleration provision is allowed
No high-cost home loan may contain a provision that permits the lender, in its sole discretion, to accelerate the indebtedness, though this does not prohibit acceleration in good faith due to the borrower failure to abide by the material terms of the loan. Other choices: the clause is barred rather than restated; notice does not cure it; and it is the sole discretion that offends rather than the standing of the loan. Source: N.Y. Banking Law § 6-l(2)(a)
Why This Is the Correct Answer
No high-cost home loan may contain a provision that permits the lender, in its sole discretion, to accelerate the indebtedness, though this does not prohibit acceleration in good faith due to the borrower failure to abide by the material terms of the loan. Other choices: the clause is barred rather than restated; notice does not cure it; and it is the sole discretion that offends rather than the standing of the loan. Source: N.Y. Banking Law § 6-l(2)(a)
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