Answer: If the borrower defaults, the lender can only take possession of the assets used as collateral and not any other assets of the borrower.

## Explanation A non-recourse mortgage is a type of loan where the lender's ability to claim repayment in the event of a default is limited to the collateral pledged for the loan. **Key Features:** - If the borrower defaults, the lender can **only** take possession of the assets used as collateral - The lender **cannot** pursue the borrower's other assets - This distinguishes non-recourse loans from recourse loans, where lenders can go after the borrower's other assets if the collateral is insufficient **Risk Implications:** - **Less risky for borrowers** - personal assets are protected - **More risky for lenders** - may not recover full loan amount if collateral value declines - Therefore, non-recourse loans often come with **higher interest rates** or **more stringent lending criteria** **Why other options are incorrect:** - **Option A**: Incorrect - Non-recourse mortgages typically have fixed interest rates, not flexible terms - **Option B**: Incorrect - This describes a recourse loan, not a non-recourse mortgage - **Option D**: Incorrect - This relates to restrictions on asset sale, not the fundamental non-recourse feature

Author: Tanishq Prabhu