A mortgage instrument may include a clause that prevents the assumption of the mortgage by a new purchaser without the lender's consent. What is this clause called?

The correct answer is the alienation clause. An alienation clause is a provision in a mortgage agreement that allows the lender to prevent the borrower from transferring the property to another party without the lender's approval. This clause protects the lender's interest by ensuring that they have control over who is responsible for the mortgage obligations. If a borrower sells the property and wants the new purchaser to assume the mortgage, the lender must agree to this transfer, ensuring that they can evaluate the creditworthiness of the new borrower.

In contrast, a prepayment penalty clause is designed to impose a fee on the borrower if they pay off the loan early. The subordination clause pertains to the order of claims against a property in case of default, determining which lenders have priority in being paid from the sale of the property. The recourse clause outlines the lender's rights to pursue the borrower personally for any remaining debt after a foreclosure sale, protecting the lender against losses. Understanding the function of these clauses is crucial for both borrowers and lenders in the mortgage process.