What is Recourse Debt?

Under California law, a 'recourse' debt is one in which neither of the two exemptions in a 'non-recourse' debt occurs.

Examples of recourse debt are refinances of existing mortgages, home improvement loans, equity lines of credit and loans other than seller financing, securing a debt for purchase of property that is not an owner-occupied one-to-four unit property.

The lender is not limited to taking the property back and the borrower may be personally liable on the debt. If the lender chooses to foreclose using a trustee's sale, then the lender waives the right to go after the borrower for the defiency despite the fact that the loan was a recourse debt.

In order to go after a defiency judgement, the lender must go through a judicial foreclosure process.

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