A due-on-sale clause in a mortgage requires that:
Correct Answer
A) The full loan balance becomes due and payable if the property is transferred
A due-on-sale clause, also called an acceleration clause, requires the borrower to pay off the entire remaining mortgage balance when the property is sold or transferred to a new owner. This clause effectively prevents a buyer from assuming the seller's existing loan without lender approval, protecting the lender's ability to adjust to current interest rates when ownership changes hands.
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Foreclosure is the legal process by which a lender takes possession of a property when a borrower fails to make mortgage payments. It allows the lender to sell the property to recover the outstanding debt.
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