Alienation Clause

AAA

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.

INVESTOPEDIA EXPLAINS '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.

RELATED TERMS
  1. Debt-To-Income Ratio - DTI

    A personal finance measure that compares an individual's debt ...
  2. Mortgage

    A debt instrument, secured by the collateral of specified real ...
  3. Credit Risk

    The risk of loss of principal or loss of a financial reward stemming ...
  4. Combined Loan To Value Ratio - ...

    A ratio used by lenders to determine the risk of default by prospective ...
  5. Gross Debt Service Ratio - GDS

    A debt service measure that financial lenders use as a rule of ...
  6. Total Annual Loan Cost (TALC)

    The projected total cost that a reverse mortgage holder should ...
Related Articles
  1. Economics

    How Interest Rates Affect The Housing Market

    Understand how rate changes can affect home prices, and learn how you can keep up.
  2. Budgeting

    Starting Early With Financial Planning

    You can achieve your financial goals if you start early enough. Here are some tips.
  3. Retirement

    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 is from your primary home, you may exclude up to $250,000 ($500,000 for ...
  4. Investing

    What is an alienation clause?

    Whether used in reference to insurance policies, mortgages or commercial loans, an alienation clause stipulates that should a purchaser or borrower sell his or her interest to another party, ...
  5. Credit & Loans

    What are the pros and cons of owning an equity REIT versus a mortgage REIT?

    Learn about investing in equity, mortgage and hybrid REITs. Explore the different strategies REITs employ to generate income and create dividends.
  6. Credit & Loans

    What is the debt ratio for an FHA loan?

    Borrowing through the Federal Housing Administration requires individuals to provide proof of income as well as information relating to total outstanding debt.
  7. Home & Auto

    What factors should I consider when shopping for the best mortgage lender?

    Comparing lenders to obtain the best mortgage loan requires research and willingness to shop around for the best loan to fit individual needs.
  8. Credit & Loans

    Buying A House? Avoid These 7 Mistakes

    Owning your own home gives you a feeling of independence that renting can’t offer, and there are big financial benefits, too.
  9. Professionals

    Should Your Retiring Clients Pay Off A Mortgage?

    Should your retiring clients pay off their mortgages? It's more complicated than 'yes' or 'no,' so here's a quick guide.
  10. Savings

    Where To Get A Mortgage If You Have Bad Credit

    Here's where to go if you have a low credit score and still want a mortgage.

You May Also Like

Hot Definitions
  1. Weather Insurance

    A type of protection against a financial loss that may be incurred because of rain, snow, storms, wind, fog, undesirable ...
  2. Portfolio Turnover

    A measure of how frequently assets within a fund are bought and sold by the managers. Portfolio turnover is calculated by ...
  3. Commercial Paper

    An unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories ...
  4. Federal Funds Rate

    The interest rate at which a depository institution lends funds maintained at the Federal Reserve to another depository institution ...
  5. Fixed Asset

    A long-term tangible piece of property that a firm owns and uses in the production of its income and is not expected to be ...
  6. Break-Even Analysis

    An analysis to determine the point at which revenue received equals the costs associated with receiving the revenue. Break-even ...
Trading Center