What makes a state a non-recourse state?

“Recourse” states allow lenders to seek a deficiency judgment against the debtor. It is difficult to classify states as strictly recourse or non-recourse.

What happens if you turn over your house in a non recourse state?

$300,000 of your mortgage is now unsecured ($700K mortgage balance – $400K value of property), which means your house is now an under-secured debt. Because you live in a non-recourse state, if you turn over the collateral (your house), your lender cannot collect on the $500,000 unsecured debt.

When does a Nevada mortgage become non recourse?

Recent legislation also makes Nevada non-recourse in most cases for residential purchasers for mortgages obtained on or after October 1, 2009. State laws also vary regarding the time in which a debtor may redeem a mortgage default.

Which is the best definition of non recourse debt?

Non-Recourse Debt 1 Understanding Non-Recourse Debt. Because in many cases the resale value of the collateral can dip below the loan balance over the course of the loan, non-recourse debt is riskier to 2 Recourse vs. Non-recourse Debt. 3 Special Considerations. …

“Recourse” states allow lenders to seek a deficiency judgment against the debtor. It is difficult to classify states as strictly recourse or non-recourse.

Are there non recourse mortgage laws in North Carolina?

While North Carolina allows non recourse mortgages, the state does not require them. If a non-judicial foreclosure is used to recoup the loss, there is no right to redemption. Borrowers cannot be sued for the debt so long as the loan was used for real estate purchases.

What happens if you default on a non recourse loan?

The lender will have no recourse against you or the other balance of your IRA funds in the event of a default. As a strategy, most IRA holders establish a separate IRA to only hold an investment that is associated with a non-recourse loan to avoid issues.

Can a deficiency judgment be sought in a non recourse state?

“Recourse” states allow lenders to seek a deficiency judgment against the debtor. It is difficult to classify states as strictly recourse or non-recourse. Almost all states allow deficiency judgments under certain conditions, for certain types of property or foreclosure proceedings.

What’s the difference between a recourse and a non-recoure?

In a recourse jurisdiction such as Ohio, if a borrower owes a lender a $100,000 deficiency after a short sale or a foreclosure sale, the lender can chase the borrower for the difference, i.e., get a personal judgment against a borrower. However, most recourse states have very strict rules governing the process of obtaining deficiency judgments.

Are there any states that are non recourse for mortgages?

SUMMARY. Based on information compiled by the National Consumer Law Center (NCLC), at least 10 states can be generally classified as non-recourse for residential mortgages: Alaska, Arizona, California, Hawaii, Minnesota, Montana, North Dakota, Oklahoma, Oregon, and Washington. Recent legislation also makes Nevada non-recourse in most cases…

Which is a recourse jurisdiction in the United States?

California, Idaho, Montana, Nevada, New York, and Utah. In a recourse jurisdiction such as Ohio, if a borrower owes a lender a $100,000 deficiency after a short sale or a foreclosure sale, the lender can chase the borrower for the difference, i.e., get a personal judgment against a borrower.