Environmental
In South Dakota, a 'lender liability' concern in environmental law means that:
ALenders are never liable for borrower environmental violations
BLenders who take an active role in managing contaminated collateral may face CERCLA liability✓ Correct
CEnvironmental liability is limited to the original polluter only
DAll banks are automatically liable for borrower pollution
Explanation
CERCLA's 'secured creditor' exemption protects lenders from liability if they don't participate in the management of the contaminated facility. However, lenders who actively manage operations may lose this exemption.
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Key Terms to Know
Debt-to-Income Ratio (DTI)
A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
Private Mortgage Insurance (PMI)Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
Pre-ApprovalA lender's conditional commitment to loan a specific amount to a borrower, based on verified income, credit, and assets.
Deed of TrustA security instrument used in many states instead of a mortgage, involving three parties: borrower (trustor), lender (beneficiary), and a neutral trustee.
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