Prior to foreclosure, a homeowner (and borrower) may receive a Notice of Acceleration from a lender. It may be referred to as Notice of Default, Acceleration Notice, Notice of Default and Acceleration, Notice of Intent to Accelerate, Default Letter, or Demand Letter. Contract law defines an acceleration clause as a “term that fully matures the performance due from a party upon a breach of the contract.”
An acceleration clause provides that if certain conditions are met, a borrower will be required to immediately repay the entire loan in one lump-sum, including any interest that accrued since the lender invoked such clause. The borrower will not have to pay the interest that would have accrued over the life of the loan.
Once a borrower misses a payment, and breaches its obligations under the loan agreement, a lender typically has the right to invoke and utilize the acceleration clause, thus beginning the process of foreclosing on the loan.
A lender may have the right to invoke an acceleration clause for failure to pay homeowners insurance or property taxes. It may even invoke the clause for a failure to maintain the property, but most lenders refrain from exercising the clause in these situations.
Acceleration clauses are typically not triggered automatically by any act or omission to act by a borrower. A lender must choose to invoke the clause once all applicable conditions have been met. Lenders want to ultimately mitigate any losses, thus invoking an acceleration clause and initiating foreclosure is usually a lender's last ditch effort in a seemingly hopeless situation.
A "Notice of Intent to Accelerate," or any of the other terms mentioned above, refer to a lender's warning to a homeowner that he or she must cure a default within a certain amount of time. However, it also provides information that a borrower has the right to cure the default and avoid acceleration, and therefore foreclosure, by reinstating the loan by paying all mortgage arrearages, i.e., the sum of all missed mortgage payments and applicable fees.
A lender must provide a borrower with the exact amount of money necessary to reinstate their loan. Any failure to provide necessary notices or meet other legal requirements may result in the availability of foreclosure defenses to any lawsuit pursuing foreclosure. The attorneys at Loan Lawyers may assist any homeowner and borrower defend a foreclosure lawsuit.At Loan Lawyers, our South Florida consumer rights and debt defense attorneys help individuals with problems related to the payment of their mortgage. If you are facing acceleration of your mortgage loan and require assistance with a possible foreclosure of your home, contact our office today by calling (888) FIGHT-13 (344-4813) and see how we can help.