A loan provision allowing the lender to demand full repayment immediately if the borrower defaults.
Why Acceleration Clause matters on the exam
This term belongs to Financing. The questions below are real items from Freehold's bank that use it - each one cites its source.
Exam questions using Acceleration Clause
Every Freehold question shows why the right answer is right — and cites its source.
An acceleration clause in a mortgage or deed of trust allows the lender to:
Declare the entire loan balance immediately due upon a specified default
Increase the interest rate at any time at all without giving any notice whatsoever
Automatically extend the whole loan term
Transfer the loan over to another borrower without the borrower's consent
Show answer & explanation
Declare the entire loan balance immediately due upon a specified default — An acceleration clause lets the lender demand immediate payment of the full remaining balance, rather than only the missed payments, when the borrower defaults under specified conditions.
Source: PSI National Real Estate Exam Content Outline §4 Financing
A lender typically relies on the acceleration clause before initiating which action?
Recording a satisfaction of mortgage
Foreclosure
Issuing a rate lock
Approving a loan assumption
Show answer & explanation
Foreclosure — Before foreclosing, a lender invokes the acceleration clause to make the entire debt due at once, since foreclosure is typically pursued for the full balance rather than only overdue installments.
Source: PSI National Real Estate Exam Content Outline §4 Financing
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