Brighthouse agreed to loan $$500,000$ to Oscar$$s Hideaway, a restaurant. Brighthouse knew that Oscar$$s was not doing well. However, Brighthouse agreed to present the loan documents to Fidelity Security, who would be acting as surety for the loan. Brighthouse and Oscar$$s had agreed that Brighthouse would actually loan Oscar$$s only $$100,000,$ that Oscar$$s would then close the business, and default on the $$500,000$ loan. Fidelity Security would then be required to pay the $$500,000$ loan and Brighthouse and Oscar$$s agreed to split $$400,000$ of that amount. Before paying, Fidelity Security discovered this agreement between Brighthouse and Oscar$$s$.$ Which of the following is correct?

Group of answer choices

Fidelity Security is not discharged because of its failure to verify transmission of the loan amount.

Fidelity Security is discharged because it was a mistake for Brighthouse to make a loan to a restaurant that was struggling.

Fidelity Security is not discharged because sureties cannot assert contract defenses.

Fidelity Security is discharged because Oscar$$s and Brighthouse colluded to misrepresent the nature of the loan.