Noah missed several monthly payments, and the lender sent a notice stating that unless the default is cured, the entire unpaid loan balance will become immediately due. Which clause is the lender invoking?
Correct Answer
D) An acceleration clause calling the full debt due
An acceleration clause allows the lender to demand immediate payment of the entire unpaid balance after a qualifying default. That is exactly what the lender is threatening when it says the full debt will become due unless Noah cures the default.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Usury is the practice of charging an interest rate that exceeds the maximum rate permitted by state law. Usury laws protect borrowers from excessive interest charges on loans.
A VA loan is a mortgage guaranteed by the Department of Veterans Affairs available to eligible veterans, active-duty service members, and surviving spouses. It offers no down payment and no private mortgage insurance requirements.
An adjustable-rate mortgage (ARM) has an interest rate that changes periodically based on market conditions, typically after an initial fixed-rate period. The rate adjustment is tied to a financial index plus a margin.
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