Which clause helps ensure a borrower regains title after loan repayment?

Which clause helps ensure a borrower regains title after loan repayment?

• A. Cross-default clause
• B. Acceleration clause
• C. Defeasance clause
• D. Power of sale clause

Answer: (C)

The defeasance clause is crucial in mortgage agreements as it stipulates that once a borrower fully pays off their loan, they regain title to the property. This clause serves a fundamental purpose: it mitigates the lender's interest in the property after the borrower fulfills their loan obligations. Essentially, the defeasance clause ensures that the borrower will have ownership rights restored to them upon the completion of their payment, making it a protective measure for borrowers. The other clauses mentioned have different functions. A cross-default clause typically ties together multiple loans, causing a default on one to trigger defaults on others, which does not directly concern regaining property title. The acceleration clause allows lenders to demand full repayment of a loan if certain conditions are met, particularly in the case of a default, but it does not directly address the restoration of property title post-repayment. The power of sale clause gives lenders the right to sell the property in the case of default, enabling foreclosure without the need for court proceedings, but again, it does not help the borrower regain title upon repayment.

The defeasance clause is crucial in mortgage agreements as it stipulates that once a borrower fully pays off their loan, they regain title to the property. This clause serves a fundamental purpose: it mitigates the lender's interest in the property after the borrower fulfills their loan obligations. Essentially, the defeasance clause ensures that the borrower will have ownership rights restored to them upon the completion of their payment, making it a protective measure for borrowers.

The other clauses mentioned have different functions. A cross-default clause typically ties together multiple loans, causing a default on one to trigger defaults on others, which does not directly concern regaining property title. The acceleration clause allows lenders to demand full repayment of a loan if certain conditions are met, particularly in the case of a default, but it does not directly address the restoration of property title post-repayment. The power of sale clause gives lenders the right to sell the property in the case of default, enabling foreclosure without the need for court proceedings, but again, it does not help the borrower regain title upon repayment.