Which clause states that the entire loan amount is due immediately upon default?

The correct answer is the acceleration clause, which is a critical component of many loan agreements. This clause allows the lender to demand the entire loan amount to be paid immediately upon the borrower defaulting on the terms of the loan. When a borrower defaults—such as through missed payments or violation of other loan terms—the lender can invoke the acceleration clause, effectively "accelerating" the payment schedule. This means that instead of making regular payments over time, the borrower is required to pay off the full remaining balance at once.

This clause serves as a protective measure for lenders, ensuring they have a course of action if the borrower fails to meet their obligations. It is important for borrowers to understand the implications of this clause, as it can lead to severe financial consequences, including potential foreclosure if they cannot pay off the entire loan immediately.

Other clauses listed in the choices do not fulfill this function. The due on sale clause, for example, relates to the sale of the property rather than default. It allows the lender to require that the loan be paid in full when the property is sold. The assumption clause pertains to the conditions under which another party may take over the existing loan obligations, but does not relate to immediate payment upon default. Finally, a deed in lieu