What is the exam-ready distinction?
| 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 |
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 1A borrower makes the final scheduled payment on a Georgia home loan, and the lender must now cancel the security deed of record. Which clause describes the release of the lender's interest once the debt is paid?
- A. Prepayment clause
- B. Acceleration clause
- C. Alienation clause
- D. Defeasance clause
Show answer and explanation →
Answer: D. Defeasance clause
A defeasance clause defeats or releases the security interest once the secured debt is fully satisfied. The trigger here is full payoff, so the security deed is canceled. Prepayment is the wrong choice, but the borrower paid on schedule rather than early.
Question 2A homeowner agrees to sell to a buyer who wants to take over the existing loan. The security deed lets the lender call the entire balance due if the property is transferred. Which clause gives the lender that right?
- A. Alienation clause
- B. Acceleration clause
- C. Defeasance clause
- D. Prepayment clause
Show answer and explanation →
Answer: A. Alienation clause
The alienation, or due-on-sale, clause is triggered by a transfer of the property. The fact here is a sale, not a missed payment, so alienation is the match. Acceleration is plausible because the balance becomes due, but acceleration is keyed to a default named in the loan documents.
Question 3A borrower misses four monthly payments, and the lender sends notice that the entire unpaid balance is now due. Which clause is the lender relying on?
- A. Alienation clause
- B. Acceleration clause
- C. Prepayment clause
- D. Defeasance clause
Show answer and explanation →
Answer: B. Acceleration clause
An acceleration clause lets the lender demand the full balance after a default specified in the loan documents. Missed payments are the default here, and no transfer or payoff has occurred. Alienation is wrong because it is triggered by a sale or transfer, not by nonpayment.
Ready to move on?
You have this distinction down when all of these are 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 key fact.
- Explain the rule or fact that makes each distractor 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. Next, RESPA, TILA, TRID and ECOA cover the federal rules for the disclosures and fair treatment surrounding the same loans whose clauses you just sorted by trigger.
Return to the complete exam-concept library or the Financing hub.