What is a mortgage acceleration clause?

A mortgage acceleration clause is a provision of a mortgage contract that gives the lender the right to demand repayment in full if the mortgaged property is sold or refinanced, or if the borrower fails to make payments in the agreed-upon time frame. This clause is typically used to reduce the risk of a mortgage default, as it allows the lender to take action in the event of default. In North Dakota, a mortgage acceleration clause is defined in the Mortgage Loan Act of 1977. This act states that a mortgagor (borrower) or any other party may include an acceleration clause in the mortgage contract. The clause allows the lender to declare the entire debt due and payable upon any failure to make a payment when due or upon the sale, transfer, or other disposition of the real property that is being mortgaged. By including this clause in the mortgage contract, the debt is instantly and immediately due and payable, and the lender is usually able to collect the debt faster than they would otherwise. In the state of North Dakota, if a mortgagor fails to make the required payments, the lender would still need to go through the legal process of foreclosure to take possession of the mortgaged property. The acceleration clause simply allows the lender to demand the outstanding balance of the loan to be paid in full, or face the legal consequences of non-payment.

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What is a mortgage acceleration clause?

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