What is the Acceleration Clause in Real Estate?

The clause in a mortgage or deed of trust that allows the lender to “accelerate” the payment schedule. This means that the borrower must pay off the full amount of the loan principal — not just catch up on the payment schedule.

Standard residential property mortgage loans do not allow unrestricted acceleration clauses — they can only use it if the borrower is in default of their obligation.

Mortgage lenders typically only exercise this clause when the borrower fails to meet loan obligations and has been declared in default. The acceleration clause often accompanies either the notice of default or notice of foreclosure.

In fact, most foreclosure suits are required to first issue a notice of acceleration. If the lender does not execute the acceleration clause, the borrower can reinstate the loan by simply paying the past-due amount. By exercising its rights under the acceleration clause, the lender will require borrowers to pay the full loan principal balance to stop the action.

Note that even if the lender does exercise its rights in the mortgage deed’s acceleration clause, it can still arrange to accept a smaller amount and reinstate the loan or declare it paid in full (as in a short sale).

For more information, see also the following entries:

• eed of Trust:
• efault:
• :Foreclosure:
• :Mortgage:
• :Mortgage Deed:
• :Mortgage Loan:
• rincipal:
• :Reinstatement:
• :Residential Property:
• :Short Sale: