What is the exam-ready distinction?
| Roadmap post | 195 of 500 |
|---|---|
| Official syllabus topic | Financing: Standard Mortgage and Security-Instrument Clauses |
| Official PSI area | Financing |
| Published weight | 10% of the 100-question national portion |
| Source edition | PSI Georgia Candidate Information Bulletin dated July 1, 2026 |
| Content checked through | August 2, 2026 |
The Rule
PSI publishes a weight for the complete official area, not a guaranteed count for this individual comparison. Use the source, document, actor, event, and timing stated in the question before applying a memorized definition.
Side-by-side comparison
Read across each row. The terms are deliberately compared on identical dimensions so the difference remains clear when the exam hides the vocabulary inside a scenario.
| Decision dimension | Acceleration | Alienation | Defeasance | Prepayment |
|---|---|---|---|---|
| Trigger | Default specified by the loan documents | Transfer or sale specified by the due-on-sale clause | Full satisfaction of the secured debt | Borrower pays principal before scheduled maturity |
| Effect | Entire balance may become immediately due | Entire balance may become due upon transfer | Security interest or title is released or defeated | Debt is reduced or paid early; a lawful charge may apply if agreed |
| Exam phrase | Default | Due on sale | Payoff and release | Early payment |
| Do not confuse with | Alienation | Acceleration for nontransfer default | Forgiveness | Defeasance after full payoff |
Decision rule
Georgia-specific distinction
Worked example
Scenario. A borrower sells the property, and the loan document permits the lender to call the unpaid balance due upon transfer.
Reason it through. The triggering fact is transfer rather than missed payments or full payoff.
Answer. The alienation or due-on-sale clause applies.
Common exam traps
- Using acceleration only for foreclosure
- Confusing due-on-sale with prepayment
- Calling defeasance debt forgiveness
- Assuming every loan permits a prepayment penalty
Original practice questions with detailed explanations
These are original instructional questions mapped to the July 1, 2026 PSI outline. They are not copied from PSI or any live examination. Choose an answer before opening the explanation.
Question 1Which clause is associated with release of the security interest after full payment?
- A. Alienation
- B. Acceleration
- C. Subordination
- D. Defeasance
Show answer and explanation →
Answer: D. Defeasance
Defeasance is correct. Acceleration permits the lender to demand the full balance after a specified default. Alienation, or due on sale, addresses a transfer. Defeasance describes release or defeat of the security interest when the debt is satisfied. Prepayment is payment before maturity and may be subject to the note and applicable law. The rejected choices are Alienation; Acceleration; Subordination. Each misses the legal category or controlling fact stated in the rule.
Question 2A borrower sells the property, and the loan document permits the lender to call the unpaid balance due upon transfer.
- A. The alienation or due-on-sale clause applies.
- B. Defeasance applies because title changed hands.
- C. Prepayment applies even though no early payment occurred.
- D. Acceleration can never follow an alienation trigger.
Show answer and explanation →
Answer: A. The alienation or due-on-sale clause applies.
The triggering fact is transfer rather than missed payments or full payoff. Therefore, The alienation or due-on-sale clause applies. The other choices fail because they replace those controlling facts with a neighboring concept or an unsupported absolute rule.
Question 3What should a candidate identify first when comparing Acceleration Versus Alienation Versus Defeasance Versus Prepayment?
- A. The option with the longest definition, without classifying the facts.
- B. Match the fact to its trigger: default, transfer, full payoff, or early payment.
- C. A memorized Georgia rule, even when the question asks for a national concept.
- D. The answer that sounds most favorable to the buyer, regardless of the document or event.
Show answer and explanation →
Answer: B. Match the fact to its trigger: default, transfer, full payoff, or early payment.
Match the fact to its trigger: default, transfer, full payoff, or early payment. That sequence identifies the legal category before the label. Choosing by definition length ignores the facts, importing a Georgia rule can answer the wrong jurisdictional question, and favoring one party substitutes sympathy for classification.
Mastery tracking
Mark this distinction mastered only when every statement is true.
- Define every compared term without using the other term as the definition.
- Rebuild the comparison table from memory.
- State the decision rule and Georgia distinction without notes.
- Solve the worked example after changing one controlling fact.
- Explain why every trap and distractor is tempting but wrong.
- Answer all three original questions correctly in mixed practice on a later day.
Recommended next lesson
Continue with RESPA Versus TILA Versus TRID Versus ECOA. Continue to roadmap comparison 196.
Return to the complete exam-concept library or the Financing hub.