A nonrecourse debt is a type of loan secured
by collateral, which is usually property. If the borrower defaults, the issuer
can seize the collateral but cannot seek out the borrower for any further
compensation, even if the collateral does not cover the full value of the
defaulted amount.
Cross default is a provision in a bond indenture or
loan agreement that puts a borrower in default if the
borrower defaults on another obligation. For instance, a cross-default clause
in a loan agreement may say that a person automatically defaults on
his car loan if he defaults on his mortgage.
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