What Does It Mean for a Loan to Be in Default

question 11

Multiple Choice

What does it mean for a loan to be in default?

• A) when the borrower of the a loan fails to repay on schedule according to a loan contract, without the agreement of the lender
• B) when the borrower of a loan fails to repay on schedule according to a loan contract, with the agreement of the lender
• C) when the lender of a loan fails to supply the full amount of a loan to the borrower
• D) when the lender of a loan supplies the full amount of a loan to a borrower without any promise of being repaid
• E) when the lender of a loan fails to offer the promised sum

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Definitions:

Freddie Mac

A public government-sponsored enterprise (GSE) that operates in the secondary mortgage market to increase the availability and affordability of home loans.

Fannie Mae

A government-sponsored enterprise established to expand the secondary mortgage market by making mortgages more accessible and affordable.

Federal Reserve's Monetary

Actions by the Federal Reserve to control the money supply and interest rates in an effort to regulate the economy.

Real Output

The quantity of goods and services produced, adjusted for inflation, reflecting the true productivity of an economy.