“Gary, I went to your short sale seminar. It was great and I learned a lot. Thanks. I have a question about loan modifications. Can they turn a non-recourse loan into a recourse loan? You mentioned something about this…”
Answer:
On a recourse loan, the lender can go after you for their loss if you’re foreclosed on or sometimes even if you do a short sale (especially if you don’t have an agent experienced in short sales looking out for you).
On a NON-recourse loan, the lender generally cannot go after you for their loss.
A loan modification that just lowers the rate and payment PROBABLY won’t turn a non-recourse loan into a recourse loan.
But some loan modifications MAY and all refinances DEFINITELY will turn a non-recourse into a recourse loan.
Which loan modifications will turn your loan into a recourse loan?
That’s complicated and beyond my expertise. And it’s a legal question, so I must advise you to speak with an attorney. If you don’t know one, Brad Nemeth, the attorney who spoke with me at the seminar, would be a great person to talk with. You can reach him at 858-571-2929.
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