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 on the loan because the house is being pledged as ________ for the loan.

Question

Quizplus · Accepted Answer

Collateral is something that is pledged as security for a loan. In this case, the house is being pledged as collateral for the mortgage loan. If the borrower defaults on the loan, the lender can take possession of the house and sell it to recover their money.

When Someone Takes Out a Mortgage Loan to Buy a House