Loan, non-recourse loan

An earmarked loan that is covered only by the value of the asset – usually real estate – that is acquired with the loan. If the borrower (creditor; debtor) is no longer able to pay, the lender can fall back on the collateral – the real estate – as compensation. But even if the collateral does not cover the full value of the default, the lender may not demand further compensation from the borrower. The debtor therefore bears no personal liability for the loan. – In the U.S. real estate market, such loans led to heavy losses in the course of the subprime crisis for the lending banks or for the owners of the securities, who had assumed the risk of the non-recourse loans worldwide via securitization. – See payoff assistance, balloon loan, Community Reinvestment Act, loan, nonstandard, Home Mortgage Disclosure Act, jingle mail, air securities, ninja loans, subprime lending, subprime housing finance, lemon trade, twenty-two-eight loan.

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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
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