How Can The Bank Accelerate My Mortgage?

You have may have read in the What Happens During Pre-Foreclosure? article about how the bank can accelerate your mortgage, which was step 6:

6. Bank activates an acceleration clause and demands the mortgage be paid in full.

In every mortgage there is a clause that states that there are certain conditions in which the mortgage may be accelerated and the bank may demand that it be paid in full. It’s known as an acceleration clause and it’s designed to protect the lender from borrowers. If the acceleration clause were not in the mortgage agreement, the lender would have no protection from borrowers who did not pay. They couldn’t start the foreclosure process and they’d be stuck without any resolution.

In addition to failure to pay, some other common negative events covered are change of ownership without the lender’s consent, destruction of the property, or other event which endangers the security of the loan. As you can see, all of those events have the potential to negatively affect the value of the home and so the acceleration clause gives the lender some protection. There are other positive (or neutral) events that can trigger the clause such as when the home is sold or when the loan is refinanced.