Question

If Joan is unable to pay her mortgage, the bank may take her house away from her. Which of the following best describes Joan’s house? (Collateral; bankruptcy; credit)

Answer 1

The best term to describe Joan's house in this context is **collateral**. Collateral refers to an asset that a borrower offers to a lender to secure a loan, and in this case, Joan's house serves as collateral for her mortgage. If she cannot pay her mortgage, the bank has the right to take the house as payment for the debt.