What scenario serves as an example of coercion from a lender?

The correct answer illustrates a scenario of coercion because it involves the lender imposing a requirement on the debtor that is not directly related to the loan itself. By mandating that the debtor acquire an insurance policy from a specific producer, the lender is leveraging their position to influence the debtor's choice in insurance, which could lead to an undue financial burden or disadvantage to the debtor. This practice can be viewed as coercive because it restricts the debtor's freedom to select their insurance provider, potentially violating fair lending practices or regulations that are designed to protect consumers from being pressured into making decisions that may not be in their best interest.

The other choices do not exhibit the same level of coercive behavior. Offering a lower interest rate for multiple loans can be seen as a competitive incentive rather than coercion; providing a free policy review is an additional service that benefits the borrower without imposition; and allowing flexibility in payment terms typically enhances the borrower’s situation by making repayment easier, which is a supportive rather than coercive practice. Thus, choice B stands out as the only scenario that reflects coercion as it directly limits the debtor's options.