Final answer:
D) Loan commitment
A lender's promise to make a loan, subject to appraisal and underwriting conditions, is termed a Loan Commitment, which entails agreement on credit provision under specified terms. Banks perform rigorous checks before granting such commitments, whereas subprime and NINJA loans are less stringent but riskier.
Step-by-step explanation:
The answer to the student's question about a lender's promise to make a loan, subject to an appraisal and underwriting is known as a Loan Commitment.
This is an agreement by the lender to provide the borrower with a specified amount of credit under certain terms and conditions. Banks in the financial capital market conduct various checks such as credit history reviews, income verification, and may require additional security measures like a cosigner or collateral before granting such a commitment.
Riskier lending practices, like subprime loans or NINJA loans, tend to have less stringent approval conditions but pose greater risks to both the lender and the borrower.