Mortgage Defeasance Clause

Posted on October 19, 2010


The defeasance clause in a mortgage that allows the borrower to get the title from the bank, once he has paid the mortgage. This title is referred to as a conditional or defeasible title.

This happens after the borrower ahs paid the principle, or the amount of the total obligation in the promissory note has been paid. There is also another interesting clause known as the “acceleration clause” allowing the bank to demand the entire amount of the loan if the mortgagor misses one payment. It is important that the mortgagor read the defeasance clause, indicating the terms upon how the mortgage must be paid off.

Another clause of note is the “due-on-sale” or alienation clause which allows the bank to have full compensation of the mortgage amount if the borrower sells the property to someone else. If the property is seized by the state for sale, the bank has first right to the profits from the sale, and after the lender has been recompensed, it releases the mortgage with a “satisfaction of mortgage” document.

 See for more details.  Christine Axsmith, Esq. is a Washington, DC – based attorney specializing in foreclosure fraud, illegal foreclosure, real estate fraud.  Her credentials can be viewed at her LinkedIn profile.  The Axsmith Law website has a wealth of information for review related to elder law and foreclosure prevention. 

Other sources of valuable information are the AARP website, the Federal Trade Commission website and the HUD website.  See Axsmith Law web site to speak to an attorney.