Foreclosure Real Estate Homes

Re: is 2nd mortgage recourse or non-recourse?

Posted by Julio Martinez-Clark on January 12, 2008 at 13:37:16: In Reply to: is 2nd mortgage recourse or non-recourse?
Posted by jamie on January 12, 2008 at 12:24:37: Hi Jamie,

I did a quick search on Google and this is what I found from someone who
gave a very good answer on the topic at //

"Question 4-28-05
Is a mortgage by nature a non-recourse loan? Or can a creditor that
secures a deficiency judgment go after the debtor's other assets?

Karjala Response 4-28-05
A mortgage is not a loan; a mortgage SECURES a loan, and the loan is
evidenced by a promissory note. So, the mortgage secures payment of the
note. The degree of security a mortgage gives depends on the terms of
the mortgage and the note, but a major distinction is between recourse
and nonrecourse mortgages. A nonrecourse mortgage is one in which, by
the terms of the note and mortgage, the mortgagee (creditor) agrees to
look solely to the secured property to satisfy the note, in the event the
note is not paid when due. That means that the mortgagee can seek to
have the property securing the note sold and have the proceeds paid to the
mortgagee to satisfy the note. However, if the proceeds are insufficient,
the mortgagee has no recourse to the other assets of the debtor.
Generally, a note is an obligation to pay and must be paid in full. So,
unless a note is explicitly nonrecourse, the creditor can seek to apply any
of the debtor's property to its payment (subject to bankruptcy limitations).
The general rule therefore is that notes secured by mortgages on property
are NOT nonrecourse. The major exception comes from the antideficiency
statutes, common at least in the western states, that apply generally to
mortgages securing loans on personal residences."

I hope this helps,

Julio Martinez-Clark

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