What clause in a mortgage requires permission from the lender to assume a loan?

The alienation clause, often referred to as a due-on-sale clause, is a standard component in many mortgage agreements that provides the lender with the right to require full repayment of the loan if the borrower transfers the property to another party. Essentially, when a property with a mortgage is sold or transferred, the lender can mandate that the loan be paid off in full, thereby deterring assumptions of the loan by a new buyer without the lender's approval. This clause ensures that lenders maintain control over who is responsible for the loan and can evaluate the creditworthiness of anyone assuming the mortgage.

This is critical for lenders as it protects them from the risk of default by potentially less creditworthy borrowers who may not meet the original loan qualifications. It also allows lenders to reassess the loan terms under current market conditions if the property changes hands. Consequently, borrowers need to seek permission from the lender if they wish to assume responsibility for the mortgage after the property has been sold. In contrast, the other clauses mentioned do not relate specifically to the premise of assuming a loan.