What are recourse loans?
A home loan or mortgage is secured by the property. A recourse loan basically means that the bank could both foreclosure AND sue for the balance due or deficiency. A non-recourse loan is one that prevents the bank from coming after the homeowner. The bank can take what is gets in a short sale or foreclosure and that is the final remedy. In California, the money obtained from loans used to purchase the property is non-recourse, typically. Loans to refinance, HELOCs, or loans to take money out of the property are typically recourse loans. We have been able to negotiate away the deficiency on ALL of our short sales.
