What are Non-Recourse Loans?

Non-Recourse Loans Definition

Non-recourse loans are typically secured by collateral such as real estate. Unlike recourse loans, if a borrower defaults, the lender can’t hold the individual personally liable for the unpaid debts. Because of this, lenders can’t seize personal property or garnish wages. With a non-recourse loan, the lender accepts a certain amount of loss. All HUD multifamily loans, including HUD 221(d)(4) loans, HUD 223(f) loans, HUD 223(a)(7) refinance loans, and HUD 232 healthcare loans are fully non-recourse.

However, most HUD multifamily loans also have “bad boy” carve-outs, a stipulation that the loan will become fully recourse if the borrower engages in certain bad acts, such as embezzlement or serious financial misrepresentation.

To learn more about the HUD 223a7 refinance program, fill out the form below to speak to a HUD/FHA loan expert.