Which of the following is the principal risk faced by a home equity lender?

Question

Quizplus · Accepted Answer

The principal risk faced by a home equity lender is that home prices in the area may decline. This could result in the borrower owing more on the loan than the value of the property, making it difficult for the lender to collect the full amount owed. Interest rates in the economy may also impact the profitability of the loan, but this is a secondary risk. There is no risk associated with home equity lending is an incorrect statement as all lending activities carry some level of risk.

Which of the Following Is the Principal Risk Faced by a Home