Which statement about default remedies in a security agreement is true?

• A. The loan's interest rate and repayment schedule
• B. The collateral valuation methods
• C. The security's release upon full payment
• D. The lender's remedies for default

Answer: (D)

Default remedies are the actions a secured party may take when the borrower fails to meet the loan obligations. The statement that the security agreement governs the lender’s remedies for default is the best answer because it is those remedies—the enforcement options available if default occurs—that the document is designed to spell out. These remedies typically include things like accelerating the debt, enforcing or seizing the collateral, and selling or disposing of the collateral to recover what is owed, all in line with the agreement and applicable law.

Terms like the loan’s interest rate and repayment schedule belong to the loan arrangement itself rather than to what happens if there is a default. Collateral valuation methods relate to determining the value of the collateral, which is about assessing risk and securing interests, not about what the lender may do when there is a default. Release of the security upon full payment describes how the security interest ends after satisfaction, not the process the lender follows when default occurs.