What type of mortgage allows the lender to call the entire loan amount due upon a certain event?

The correct answer is C, referring to an Acceleration Clause Mortgage. An acceleration clause is a provision included in some mortgage agreements that allows the lender to require the borrower to repay the entire outstanding balance of the loan immediately upon the occurrence of specified events, such as defaulting on the loan payments, selling the property, or failing to maintain insurance. This clause is essential for lenders as it provides them with a measure of protection, allowing them to act swiftly if the borrower is not complying with the terms of the mortgage.

In a subordinate mortgage, the arrangement typically refers to a secondary loan that is lower in priority compared to a primary mortgage, and it doesn’t intrinsically include an acceleration clause. An adjustable-rate mortgage involves fluctuating interest rates over the life of the loan but does not necessarily entail an acceleration feature. Lastly, a conventional mortgage refers to a standard loan that is not backed by the government and does not automatically mean it includes acceleration clauses. Understanding these distinctions highlights the importance of the acceleration clause in protecting lender interests in the mortgage agreement.