Question

If the debt is "____" the lender stands to lose not only the money invested in...

If the debt is "____" the lender stands to lose not only the money invested in the real estate project but any other assets owned in case of default

A. Leveraged

B. Standardized

C. Non-recourse

D. Recourse

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Answer #1

Non recourse form of debt, which favours the borrower because when the borrowers default, the lender can only recover the amount, from the collateral attached to the loan even if the amount of loans are still due, it can never be recovered by selling borrowers other asset.

So if the debt is NON RECOURSE,the lander stands to lose not only the money invested in the real estate project but any other asset owned in case of default.

all the other options are false because in recourse loan, it favours the lender, while standardized and leverage debt are irrelevant in this case.

So correct answer is option (C) NON-RECOURSE.

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