Finance
In South Dakota, which of the following is the primary risk to a lender in issuing a mortgage?
AThe property may decline in value below the loan balance, and the borrower may default✓ Correct
BThe property taxes may increase during the loan term
CThe interest rate environment may change during a fixed-rate loan
DThe property may require costly renovations
Explanation
The primary risk to a mortgage lender is that the borrower defaults AND the property's value has declined below the loan balance, leaving the lender unable to recover the full loan amount through foreclosure sale. This combined default and collateral risk is why lenders require appraisals and LTV limits.
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