Recourse Loan vs. Non Recourse Loan
Do I have a California Recourse Refinance Loans or a non recourse stock loans ?
Here’s something important you need to know about short sales, depending on whether the loan on your home is a “purchase money” loan or whether you did a “cash out” refinance after your purchase, you either have a “non recourse” or a “recourse” loan. This makes a BIG difference as to whether or not your lender can go after you to repay your debt, even after your home has been foreclosed on. I’m referring to second trust deeds. (HELOC’s and Cash out refi’s)
A Non-Recourse Stock Loan is…
An original loan that was taken out when you purchased your property. Non recourse stock loans basically means that if the property were to go through foreclosure the bank couldn’t come after you for the difference. Non recourse real estate loans are the easiest to work with.
A Recourse Loan is… ( This Can Be Ugly)
A loan agreement under which a borrower gives an undertaking to repay a debt even if the funded asset (acquired with the loan proceeds) cannot be liquidated to cover the loan amount. In case of a default, the lender can seize and sell the funded asset as well as the borrower’s un-pledged assets or properties. That recourse loan sounds scary huh? They can be. The great news is, I can help you either way but the steps are different. I find that Wells Fargo has been one of the easier banks to work with on recourse loans. California
I have had great success negotiating with banks to remove deficiency rights and accept a pay off. Completing a short sale is a stated transaction. It’s how we play the game that counts.