What are Non-Recourse Loans?

Non-Recourse Loans in Relation to FHA 232 Financing

Non-recourse loans are loans for which, if a borrower defaults, they cannot be held personally liable. This means that lenders may not seize their personal property or garnish wages. Instead, lenders must accept a certain amount of loss. These loans are secured by collateral (typically real estate). HUD 232 and HUD 232/223(f) loans are fully non-recourse, though they are typically subject to standard “bad-boy carve-outs,” which stipulate that the loan will become recourse only if the borrower has committed certain bad acts, such as embezzlement, fraud, or ‘intentional’ bankruptcy.

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