What is an accelerations clause?

An accelerations clause is a clause in a contract or a loan document that allows a lender to demand payment of all remaining balances due, regardless of regular payment schedules set forth in the document. This clause is commonly seen in loan documents, such as mortgages, and can be triggered if the borrower falls behind on their payments or fails to follow the terms of the loan agreement. In Texas, an accelerations clause is governed by the Texas Statutes, which specify that the lender is allowed to accelerate the entire loan amount, including the principal amount, accrued interest, and any additional fees the loan agreement specifies. This may be done if the borrower fails to honor their obligations as outlined in the loan agreement, and may also be done if the lender decides to foreclose on the loan. In order to protect borrowers, the Texas Statutes also provide for certain defenses to foreclosure. For example, the borrower can challenge the validity of the acceleration clause, or they can dispute the amount of acceleration. If successful, this can help the borrower get a better loan arrangement from the lender and possibly even prevent foreclosure.

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What is an accelerations clause?

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