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When someone takes out a mortgage loan to buy a house, the mortgage lender can take possession of the house and sell it if the borrower defaults by failing to make payments on the loan because the house
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14 votes
When someone takes out a mortgage loan to buy a house, the mortgage lender can take possession of the house and sell it if the borrower defaults by failing to make payments on the loan because the house is being pledged as ________ for the loan. Select one: A. collateral B. a liability C. goodwill D. insurance Clear my choice

User Kyle H
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14 votes
14 votes

Answer:

A. Collateral

Step-by-step explanation:

A collateral is a valuable item, a property or an asset that is offered by a borrower of a loan to the lender of the loan as a form of loan security, such that the lender can take possession of the asset, monetize the asset and recover the losses. Collateralized loans includes car loans and mortgages.

Lending such as those given in business credit card does not require loan securities

User Bbbonthemoon
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