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What is the difference between a recourse loan and a non-recourse loan?

April 26, 2017loan non-recourse recourse

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What is the difference between a recourse loan and a non-recourse loan?

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A. A recourse loan is one in which the loan is guaranteed by the borrower personally. A non-recourse loan is one in which a third-party organization is formed for the property, such as an LLC or a corporation. If the loan defaults for any reason, the mortgage holder would then take control of the LLC or corporation.