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Today, virtually all mortgages contain acceleration clauses permitting the mortgagee to accelerate the mortgage indebtedness upon default by the mortgagor as defined in the mortgage loan documentation. Section 8.1 of the new Restatement (Third) of Property: Mortgages [hereinafter Mortgages Restatement]1 endorses the view that these mortgage acceleration provisions are generally enforceable after default in accordance with their terms. Following default and acceleration, the mortgagor may prevent foreclosure only by redeeming the property from the mortgage debt, i.e., “only by paying or tendering to the mortgagee the full accelerated mortgage obligation.” Section 8.1(d)(3), however, places certain constraints upon the mortgagee's right to accelerate, permitting the mortgagor to reinstate (after curing any existing defaults) if “the mortgagee has engaged in fraud, bad faith, or other conduct making acceleration unconscionable.” This standard has a significant judicial pedigree in mortgage law decisions, but its use of the elusive term “bad faith”--a term often understood in the context of its more honorable twin, “good faith”--creates the potential for uncertainty in the evaluation of disputes over the enforcement of acceleration provisions.

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