Are HUD 232 Loans Non-Recourse?

The HUD 232 Program and Loan Recourse Provisions 

If a loan is non-recourse, a lender cannot go after a borrower's personal assets if they default on the loan. Instead, they can only attempt to repossess the loan collateral. In multifamily real estate loans, this is typically a piece of property.

Fortunately for borrowers, HUD 232 loans are fully non-recourse. This means that their personal property is usually safe, even if they face a significant financial setback that leads them to default on the loan for their skilled nursing, assisted living, or memory care facility. 

However, this doesn't mean that a HUD 232 borrower can do anything and get away with it. Just like most other non-recourse loans, HUD 232 loans have "bad boy" carve-out provisions. This means that, if a borrower is shown to be engaging in fraud or engages in other bad acts (sometimes including 'intentional' bankruptcy), the loan will become full-recourse. In that case, the borrower can go after the borrower's personal assets in order to recoup their losses. 

To learn more about FHA 232 loans, fill out the form below to speak to a HUD/FHA loan expert.