ِAcceleration Clause
In the event a borrower defaults on the loan obligation, an acceleration clause enables the lender to declare the entire loan balance due and payable. If this were not so, the default would apply only to the amount overdue. As a result, the cost of legal action against the borrower would almost always exceed what could be recovered. It would never pay to sue in case of default, and the mortgage would be a meaningless.
Tuesday, June 23, 2009
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