A borrower has defaulted on the mortgage. The mortgage contains an acceleration clause. What does this clause permit the lender to do?

The acceleration clause in a mortgage allows the lender to demand immediate payment of the entire outstanding balance of the loan if the borrower defaults. This means that instead of requiring only the missed payments or a portion of the mortgage, the lender can call the entire loan amount due right away. This provision is included in mortgage agreements to protect the lender's interest, ensuring that they can quickly recover their investment in the event of the borrower’s default.

In this scenario, while foreclosure is a possible action that a lender can take following a default, the specific function of the acceleration clause is to allow for the immediate demand for full payment. Additionally, modifying loan terms or lowering the interest rate typically would not fall under the action permitted by an acceleration clause; these actions are generally separate processes that could be negotiated by the borrower and lender, which is outside the scope of what an acceleration clause is designed to address.