Question

Jim and Jennifer have excellent credit, and they purchased property with a mortgage. However, they experienced financial difficulty and missed more than three months of payments. Which of the following is the most probable consequence of Jim and Jennifer's late payments?

1) The bank will decrease the interest rate on the loan.
2) Their debt-to-credit ratio will decrease.
3) The bank could repossess the property.
4) Their credit score could increase.

Answer 1

The most probable consequence of Jim and Jennifer missing more than three months of mortgage payments is that the bank could repossess the property, and their credit score could decrease.

Step-by-step explanation:

Given the circumstance that Jim and Jennifer have missed more than three months of mortgage payments, the most probable consequence is that the bank could repossess the property. When borrowers are late on loan payments, they are perceived as less likely to repay the loan on time, which could lead to foreclosure, especially if the missed payments continue. It is also likely that their credit score could decrease due to the late payments, as this negatively impacts credit history. In contrast, the bank would not decrease the interest rate on the loan, nor would their debt-to-credit ratio decrease in this scenario.