What does recourse mean in mortgage lending and how does it compare to non-recourse?

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Multiple Choice

What does recourse mean in mortgage lending and how does it compare to non-recourse?

In mortgage lending, recourse means the lender can go beyond the property itself to collect the debt if you default. The borrower can be pursued for the deficiency with personal assets or income. Non-recourse, by contrast, means the lender’s only remedy is the property; if the sale of the collateral doesn’t cover the loan, the borrower isn’t personally liable for the remainder. So the accurate description is that recourse involves personal liability beyond the property. The idea that the borrower isn’t personally liable describes non-recourse, not recourse, and statements claiming both forms limit liability to the property aren’t accurate for recourse loans. Understand this distinction, as it affects risk to the borrower's other assets and the loan terms.

In mortgage lending, recourse means the lender can go beyond the property itself to collect the debt if you default. The borrower can be pursued for the deficiency with personal assets or income. Non-recourse, by contrast, means the lender’s only remedy is the property; if the sale of the collateral doesn’t cover the loan, the borrower isn’t personally liable for the remainder.

So the accurate description is that recourse involves personal liability beyond the property. The idea that the borrower isn’t personally liable describes non-recourse, not recourse, and statements claiming both forms limit liability to the property aren’t accurate for recourse loans. Understand this distinction, as it affects risk to the borrower's other assets and the loan terms.

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