A consumer fails to make a payment due on a mortgage loan. This is known as
A consumer fails to make a payment due on a mortgage loan. This is known as __:
[A]Credit Risk
[B]Refinancing Risk
[C]Liquidity Risk
[D]Settlement Risk
Credit Risk
Credit risk refers to the risk that a borrower will default on any type of debt by failing to make required payments. The risk is primarily that of the lender and includes lost principal and interest, disruption to cash flows, and increased collection costs. The loss may be complete or partial and can arise in a number of circumstances.