Is the DOS clause actually spelled out in the mortgage or just implied because it's not assumable?

[Matthew Hall]

The mortgage I'm looking at says nothing about a DOS clause but does say it does not have a "Demand Feature," which apparently allows the lender to call the loan due for any reason. It does however have a box checked that states that the loan is not assumable. So given that, is a DOS automatically implied as the penalty or trigger for doing a sub2 or similar deal?

[Bill Gulley]

Originally posted by @Matthew Hall:

Originally posted by @Wayne Brooks:

@Jesse T. Not true, without a due on sale acceleration clause.  This is why they exist.

Ok, so it's established that no DOS clause exists anywhere in the note, but that the note DOES say that it's not assumable. How would one know/find out what the penalty for transferring title would be if it's not actually spelled out anywhere? I would guess that the lender would somehow reserve the right to do more than just wag their finger.

Okay, I can't take it anymore....LOL

The language quoted is in the Deed of Trust or security agreement of the mortgage, it doesn't need to be in the note because it is not the terms of the note, it's the terms of the security agreement pledging the property as security for the loan. If the terms of the collateralized security is breached, the security is no longer pledged as agreed, the note is not properly secured and it may be called due and payable.

You enter into two agreements with a mortgage loan, one is the promise to pay as agreed, that is in the note, the other agreement is the security pledged under the conditions of making the note. Violate either one and the lender has recourse. 

The due on sale is by federal statute, where it says the lender may not accelerate the note if it violates the federal statute is because 1., laws change but this one has not, and 2. there are certain exemptions, they just didn't point out the exemptions (which was wise because doing so would just give borrowers crazy ideas they hear from gurus and mess things up trying to get around the covenant not to give a beneficial interest away).

The due-on-sale clause or the acceleration or abandonment or alienation  clause is contained in the standard deed of trust, or mortgage security agreement in all mortgages made by any insured lending institution. Most other lenders use the standard agreements too, if they have any sense.....  :)