Which mortgage clause allows the lender to demand full repayment of the loan if the borrower defaults?

• A. Prepayment clause
• B. Acceleration clause
• C. Due-on-sale clause
• D. Interest clause

Answer: (B)

The main idea is identifying which clause lets a lender demand all outstanding loan money if the borrower defaults. This is an acceleration clause. When default occurs, the acceleration clause allows the lender to declare the entire loan balance due immediately, rather than waiting for the remaining scheduled payments. If the borrower cannot pay, the lender can proceed with foreclosure. This is different from a prepayment clause (which controls paying off early, often with penalties), a due-on-sale clause (which requires payoff if the property is sold or transferred), or an interest clause (which states the loan’s interest rate).