Karim Corp. requires a minimum $8,000 cash balance. If necessary, loans are taken to meet this requirement at a cost of 1% inter
est per month (paid monthly). Any excess cash is used to repay loans at month-end. The cash balance on July 1 is $8,400 and the company has no outstanding loans. Forecasted cash receipts (other than for loans received) and forecasted cash payments (other than for loan or interest payments) are: July August September
Cash receipts $ 20,000 $ 26,000 $ 40,000
Cash disbursements 28,000 30,000 22,000
A mortgage clause that states that the mortgage is due and payable upon certain conditions, such as the non-payment is the option(d) i.e, the Acceleration clause.
<h3>What is a mortgage clause?</h3>
A provision in an insurance policy (such as a fire insurance policy) that allows the designated mortgage to receive payment for property damage or loss.
There are different types of clauses:
Acceleration clause
Due-On-Sale clause
Prepayment Penalty clause
Subordination clause
Release clause
If the borrower breaches the conditions of the agreement, an acceleration clause in a mortgage or trust deed states that the entire obligation is payable immediately. Additionally, it will specify the circumstances under which a lender may request full loan payback. For instance, home loans frequently feature an acceleration provision that kicks in after a certain number of missed payments.
Most of the time, it is harmful to accelerate a loan. Typically, it denotes that the borrower has fallen behind on payments or broken the terms of the agreement, and the lender is requiring prompt repayment of the whole loan balance to avoid foreclosure.
