What is an accelerations clause?

An acceleration clause is a legal term used in a mortgage contract or deed of trust. It allows a lender to require a borrower to pay the full amount of the loan—principal and interest—immediately if the borrower defaults on the loan. This clause is often included in mortgages and deeds of trust in the state of Virginia as a way to reduce the lender’s risk, and to get their money back from the borrower in the case of a default. When a borrower stops making payments on a loan, the lender can invoke the acceleration clause and demand the full loan amount. The borrower may be able to negotiate a new loan repayment schedule if they can demonstrate they are unable to make the full payment. If the borrower is still unable to pay the full amount due, the lender can move forward with foreclosure of the property. The terms of the acceleration clause will determine how quickly the lender can take action. In Virginia, owners of foreclosed properties may request a mediation process to work out a repayment plan with the lender before the property is placed in foreclosure. This process allows the borrower and lender to come to an agreement, which may include a new repayment plan, in an effort to avoid foreclosure. However, if the lender invokes the acceleration clause, the mediation process may not be necessary. The lender can proceed with foreclosure as soon as payment is due.

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What is an accelerations clause?

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