# Credit Risk ## Lender Obligations The lender is obliged to lock funds on the Protocol in order to submit active offers. Once an offer is accepted, the funds become unavailable to the lender until termination of the term loan. In the event of liquidation, the lender is obliged to absorb losses due to credit events and pay liquidation fee to the Protocol whenever applicable. ## Borrower Obligations By entering into a term loan agreement, the borrower is obliged to lock the NFT Collateral on the Protocol until the loan and relevant charges are fully repaid. In the event of liquidation, the borrower will lose ownership of the NFT Collateral permanently. Each loan position is isolated and any credit event occurring to a loan position does not affect the status of any other loan that belongs to the same counterparty. --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://docs.pine.loans/risk-and-security/credit-risk.md?ask= ``` The question should be specific, self-contained, and written in natural language. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.