Borrower Risk


Definition of "Borrower risk"

Liability a borrower assumes. These include: (1) Due to unforeseen circumstances, the borrower may lose the financial ability to repay the principal or interest of a loan placing the collaterized property at risk of foreclosure. (2) In the case of an adjustable rate mortgage, rising interest charges may make the payments unaffordable, placing the mortgaged property at risk of foreclosure. (3)In the event of a depreciating asset, the loan value may exceed the value of the collaterized asset. (4) In the event of the death of the borrower, payments on a loan will become liability of the heirs.

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