Good Day, Should you ever default on a recourse loan and find that said loan will cover less than the value of the collateral, a lender will have a right to pursue the borrower's personal assets. Conversely, in a nonrecourse loan scenario, the lender's claim terminates with the collateral itself. Recourse loans constitute a majority of types of loans including personal and car loans, and also include many mortgages, some commercial real estate and nonpurchase residential loans are typically nonrecourse. State laws govern recourse proceedings; for example, California and Arizona limit deficiency judgments on certain home loans, so these types of loans may be classified as nonrecourse. As such, your exposure to personal liability in the event of a default will be determined by the type of loan you have and the law in effect in your jurisdiction. If you decide to use this quote, I'd love to stay connected! Feel free to reach me at marketing@docva.com and nathanbarz@docva.com
Working in Texas real estate, I frequently explain to clients that a recourse loan means they're personally liable for the full debt, while nonrecourse only puts the property at risk. I've helped many homeowners understand that their primary mortgages, home equity loans, and most personal loans are typically recourse loans here in Texas. Through helping clients in foreclosure situations, I've learned that Texas actually has some of the stronger recourse laws compared to states like California or Arizona, which offer more borrower protections.