Non-Recourse Loans

A non-recourse loan is one where the borrower is not liable to the lender for the loan. The lender’s recourse is limited to the collateral securing the loan. If there is a default, the lender can foreclose on the property but cannot sue the borrower for any deficiency or shortfall that remains due under the loan after the lender forecloses on the collateral and sells it. Non-recourse loans are commonly used by IRA investors because IRS rules prohibit and IRA investor from guaranteeing loans personally for investments made with IRA funds