Explanation:
A nonrecourse loan is a type of secured loan where the lender’s only means of recovery in the event of default is to seize the pledged collateral (such as real estate). The lender has no "recourse" to pursue the borrower's other assets or income to make up for any shortfall if the collateral's value is less than the outstanding loan balance. Therefore, option A is the correct definition.
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Q.92 Which of the following best defines a nonrecourse loan?
A
A type of loan secured by collateral in which the issuer can seize the collateral but cannot seek from the borrower for any further compensation if the borrower defaults.
B
A type of unsecured loan in which the issuer cannot seek out the borrower for any compensation if the borrower defaults.
C
A type of loan secured by collateral, usually a property, in which the issuer can only seek further compensation in the event the collateral does not cover the full value of the defaulted amount.
D
A type of unsecured loan in which the borrower pays a very low initial interest rate that increases after a few years.
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