Which of the following characteristics of a residential mortgage loan would best protect the lender from a strategic default by the borrower?
A) recourse
B) a prepayment option
C) Interest-only payments

Question

Quizplus · Accepted Answer

Recourse is the best option to protect the lender from a strategic default by the borrower because it provides the lender with the right to go after the borrower's other assets in case of default. This creates an extra layer of protection for the lender and typically results in borrowers being more diligent about making payments to avoid losing their assets. Prepayment options and interest-only payments do not provide the same level of protection against default.

Which of the Following Characteristics of a Residential Mortgage Loan