### What does recourse allow a lender to do in case of a borrower’s default? - [ ] Only foreclose on the collateral property. - [x] Claim additional assets beyond the collateral. - [ ] Freeze the borrower's bank accounts. - [ ] Provide a loan modification. > **Explanation:** Recourse allows a lender to claim additional assets beyond the collateral if the borrower defaults on the loan and the collateral sale is insufficient to cover the outstanding balance. ### How does a non-recourse loan differ from a recourse loan? - [ ] It allows lenders to pursue the borrower's other assets. - [x] The lender's claims are limited to only the collateral. - [ ] It usually has higher interest rates. - [ ] It does not require any collateral. > **Explanation:** A non-recourse loan limits the lender's claims to the collateral itself, protecting the borrower’s other assets from claims. ### In which situation might a lender have recourse? - [ ] If the borrower’s collateral covers the loan amount. - [x] If the collateral does not cover the unpaid loan principal after foreclosure. - [ ] If the borrower requests a loan modification. - [ ] If the borrower pays the loan on time. > **Explanation:** Recourse is exercised when the collateral does not cover the unpaid loan principal after foreclosure and the lender seeks to claim the borrower’s other assets. ### What protections do borrowers have with non-recourse loans? - [ ] Protection against foreclosure. - [x] Protection of personal assets beyond the collateral. - [ ] Guaranteed loan forgiveness. - [ ] Protection from credit score impact. > **Explanation:** Borrowers with non-recourse loans are protected from lenders claiming their personal assets beyond the collateral in the event of a default. ### Which type of loan provides additional security to lenders? - [ ] Non-recourse loans. - [x] Recourse loans. - [ ] Equity loans. - [ ] Fixed-rate loans. > **Explanation:** Recourse loans provide additional security to lenders because they can claim the borrower’s other assets if the collateral is insufficient to cover the loan. ### If a borrower defaults on a recourse loan, what can the lender do besides foreclosing on the collateral? - [ ] Seize the borrower's vehicle without notice. - [x] Pursue the borrower’s other assets to satisfy the debt. - [ ] Refund part of the loan to the borrower. - [ ] Invoke an immediate debt consolidation. > **Explanation:** If a borrower defaults on a recourse loan, the lender can foreclose on the collateral and pursue the borrower’s other assets to satisfy the remaining debt. ### What is the main risk for borrowers in a recourse loan agreement? - [ ] Limited loan amounts. - [ ] Higher interest rates. - [x] Potential loss of other personal assets. - [ ] Mandatory insurance requirements. > **Explanation:** In recourse loan agreements, the main risk for borrowers is the potential loss of other personal assets beyond the collateral if they default on the loan and the collateral does not cover the debt. ### Are recourse loans more common in residential or commercial real estate? - [ ] Equally common. - [x] Residential real estate. - [ ] Commercial real estate. - [ ] International real estate. > **Explanation:** Recourse loans are more common in residential real estate as they provide lenders with additional security by enabling them to pursue the borrower’s other assets. ### Can negotiation be done to limit a recourse loan’s extent? - [x] Yes, borrowers can negotiate to limit the recourse terms. - [ ] No, recourse terms are non-negotiable. - [ ] Only lenders can initiate recourse term changes. - [ ] Negotiations are prohibited by law. > **Explanation:** Borrowers have the ability to negotiate with lenders to limit the extent of recourse or to switch to a non-recourse loan. ### What happens to the defaulting borrower's credit score in a recourse situation? - [x] It is significantly impacted negatively. - [ ] It remains unaffected. - [ ] It improves due to credit history. - [ ] It automatically returns to its previous high score. > **Explanation:** A borrower’s credit score is significantly impacted negatively in a recourse situation, as defaulting on a loan and having additional assets pursued by the lender is recorded on their credit report.