Alienation Clause


DEFINITION of 'Alienation Clause'

A clause in a mortgage contract that requires full payment of the balance of a mortgage at the lender's discretion if the property is sold or the title to the property changes to another person. Nearly all mortgages have an alienation clause.

BREAKING DOWN 'Alienation Clause'

An alienation clause protects a lender by preventing a borrower from assigning debt without the lender's approval. An alienation clause protects the lender from credit risk of the original borrower, or third-party credit risk if the original borrower assigns the debt to another party.

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  1. I sold my house. Can I exclude the gain from my income?

    Generally, you are required to include the gain from the sale of your home in your taxable income. However, if the gain ... Read Full Answer >>
  2. What is an alienation clause?

    Whether used in reference to insurance policies, mortgages or commercial loans, an alienation clause stipulates that should ... Read Full Answer >>
  3. Do FHA loans have prepayment penalties?

    Unlike subprime mortgages issued by some conventional commercial lenders, Federal Housing Administration (FHA) loans do not ... Read Full Answer >>
  4. Can FHA loans be refinanced?

    Federal Housing Administration (FHA) loans can be refinanced in several ways. According to the U.S. Department of Housing ... Read Full Answer >>
  5. Can FHA loans be used for investment property?

    Federal Housing Administration (FHA) loans were created to promote homeownership. These loans have lower down payment requirements ... Read Full Answer >>
  6. Do FHA loans have private mortgage insurance (PMI)?

    he When you make a down payment from 3 to 20% of the value of your home and take out a Federal Housing Administration (FHA) ... Read Full Answer >>

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