A non-recourse loan is one where the collateral for the debt is the sole recourse for repayment in the event of default. In contrast, recourse loans require the borrower to pledge their personal income and assets to repay the loan if they default. Most homeowner loans have recourse to the personal income and assets of the borrower. This is why credit scores and the assets and liabilities of the borrower play such an important role in most bank loan underwriting. For non-recourse loans the due diligence on the property is paramount and the property will be promptly foreclosed if the loan goes into default.
