What does the Alienation Clause specify?

The Alienation Clause specifies the rights of the lender in the event that the property secured by a loan is sold or transferred to another party without the lender's notification or consent. This clause is designed to protect the lender's interests and ensures that they retain the ability to collect the outstanding debt or require the full repayment of the loan if the property changes ownership without their approval.

When a borrower sells the property, the Alienation Clause may trigger various actions such as requiring the loan to be paid in full, or it may allow the lender to deny the transfer of the loan to the new property owner. This is particularly important because if a borrower sells the property, the lender wants to make sure that the new owner is creditworthy and can take over the debt obligations.

In contrast, the other options do not accurately describe the purpose of the Alienation Clause:

• Property tax obligations, while crucial for property ownership, are not related to the transfer of mortgage ownership.
• Loan modification processes pertain to changes in the loan terms, which is a separate issue from property transfer.
• Home equity loan requirements deal specifically with the criteria for obtaining a loan secured by the homeowner's equity, rather than addressing ownership changes.

Understanding the function of an Alienation Clause