Concepts Definitions

• Alienation Clause (Due-on-Sale Clause): A provision in a mortgage or deed of trust that gives the lender the right to demand immediate repayment of the entire loan balance if the borrower sells or transfers title to the property without the lender’s prior permission.
• Tight Money Market: An economic condition characterized by high interest rates, strict lending standards, and limited availability of credit, making it difficult and expensive for borrowers to obtain loans.
• Loan Assumption: A process where a new buyer takes over the existing mortgage loan and its terms from the seller. An alienation clause typically prevents this without lender approval.
• Subject To Mortgage: A method where a buyer takes title to a mortgaged property and makes payments on the existing loan without formally assuming it or being personally liable for the debt. The alienation clause would still be triggered, allowing the lender to call the loan due.
• New Financing: The process of obtaining a new loan from a lender to fund the purchase of a property. In a tight money market, this means accepting current, potentially higher interest rates and stricter terms.

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