Definition of "Demand Clause"

A clause in the note that allows the lender to demand repayment of the balance in full. A demand clause is even better (for the lender) than an acceleration clause. An acceleration clause allows the lender to call the loan if the borrower violates some contractual provision, such as a requirement that the loan must be repaid upon sale of the property. A demand clause allows the lender to demand repayment for any reason. For example, the lender can force you to accept a higher rate by threatening that if you don't agree, the loan will be called. The lender asking for a demand clause will no doubt disavow any intention of behaving in such a manner. But you don't put your head on a chopping block just because the executioner promises not to cut it off. The Truth in Lending Disclosure has a statement that reads //This loan has a demand feature,' which is checked 'yes' or 'no.' Some lenders will check 'yes,' even though the note has an acceleration rather than a demand feature.

image of a real estate dictionary page

Have a question or comment?

We're here to help.

*** Your email address will remain confidential.
 

 

Popular Mortgage Terms

The rate charged the borrower each period for the loan of money, by custom quoted on an annual basis. A mortgage interest rate is a rate on a loan secured by a specific property. ...

A contribution to a borrower's down payment or settlement costs made by a home seller, as an alternative to a price reduction. ...

The definition of credit risk is at the core of lending. Banks lend money to businesses and individuals and expect to recover the principal and win interest. Banks offer a variety of loans, ...

A variety of unsavory lender practices designed to take advantage of unwary borrowers. Predatory lending covers much the same ground as Mortgage Scams and Tricks/Scams by Loan Providers. ...

Same as term Bridge Loan: A short-term loan, usually from a bank, that 'bridges' the period between the closing of a home purchase and the closing of a home sale. To qualify for a bridge ...

The most recently published value of the index used to adjust the interest rate on an indexed ARM. ...

The frequency of rate adjustments on an ARM after the initial rate period is over. The rate adjustment period is sometimes but not always the same as the initial rate period. As an example, ...

If you’re a student in medical school, a resident or a medically qualified doctor, you must know the definition of Physicians Mortgage Loan, also known as Doctor Loans. Why? Because, ...

A mortgage on which the borrower gives up a share in future price appreciation in exchange for a lower interest rate and/or interest deferral. SAM's in the private market had a brief ...

Popular Mortgage Questions