Loss Given Default - LGD
Categories: Mortgage
The amount the lender will lose should the borrower default (the loss in a given default scenario).
It's defined in percentages. For instance, say you buy a house and then default on the mortgage. The bank can then take the house back and sell it. If they sell it and recoup 80% of what they loaned you, the remaining 20% is likely lost. So that 20% is their loss given default in this scenario.