If the collateral from one loan is used to secure the obligations on another loan,this is called __________,or sometimes called a "__________" clause.

Question

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Cross-collateralization is the use of collateral from one loan to secure the obligations on another loan. It is also sometimes called a "dragnet" clause. Choice A is not correct because perfection refers to the process of establishing a security interest in collateral. Choice C is incorrect because a floating lien is a security interest in a changing pool of collateral. Choice D is not a commonly used or recognized term in the context of collateralization.

If the Collateral from One Loan Is Used to Secure