Recourse


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Related to Recourse: Without recourse, have recourse to

Recourse

Term describing a type of loan. If a loan is with recourse, the lender has a the ability has the ability to fall back to the guarantor of the loan if the borrower fails to pay. For example, Bank A has a loan with Company X. Bank A sells the loan to Bank B with recourse. If Company X defaults, Bank B can demand Bank A fulfill the loan obligation.

Recourse

Describing a loan for which there is a co-signer. That is, if the borrower defaults on the loan, the co-signer becomes legally liable for repayment of a recourse loan. Thus, in addition to any collateral that may or may not secure the loan, the lender is further protected from default by the existence of the co-signer. See also: Non-Recourse Loan.

recourse

(1) The ability of a lender to demand payment from a borrower if the collateral is insufficient to pay the debt in full,or even if the lender chooses not to attempt foreclosure of the collateral. (2) The requirement that the seller of a promissory note repurchase it if the borrower defaults.

Example: Vic's Vinyl Siding agrees to install siding on Nellie's house in exchange for her agreement to pay $300 a month over the next 5 years, for a total of $18,000. Nellie signs a promissory note with those payments, and a mortgage. Vic does the work and then sells the note and mortgage to Quick Cash Company, with recourse, for $10,000. Three days later the siding falls off the house and Nellie refuses to make any more payments. Under federal law, she can refuse to pay Quick Cash Company even though her dispute is with Vic's Vinyl Siding. Because the sale was with recourse, Quick Cash can force Vic to repay the $10,000 to them and take back Nellie's promissory note and mortgage. Nellie and Vic may then battle over the quality of the work.

References in periodicals archive ?
Since the debt in the CCA was personally guaranteed by the members of the partnership, the taxpayer's position was that the debt was recourse under Sec.
The competence of settling the recourse in law's interest was assigned to the united sections of the High Court of Cassation and Justice
Another basic exception which will trigger full recourse liability for the repayment of the loan is the filing for bankruptcy by the borrower.
In spite of this exemption, the regulators have indicated in the past that VA and FHA servicing should be treated as recourse arrangements because lenders cannot control VA no-bids and because the FHA guarantee is conditional on properly followed claims procedures.
Example 3: The facts are the same as in Example 1, except that the $50,000 debt is $40,000 nonrecourse and $10,000 recourse.
Under generally accepted accounting principles (GAAP)--or more specifically Financial Accounting Standard 77 (FAS 77)--which the bill proposes to utilize, a bank may remove from its balance sheet an asset sold with recourse even if it has retained the risk of ownership.
77, Reporting by Transferors of Receivables with Recourse, recognition of the sale of receivables is permitted when the buyer has recourse to the seller for credit losses if those losses can be estimated at thE,, time of sale.
Petunia, a New York limited partnership, purchased from the Venture Company computer equipment that had been involved in four prior sales transactions, subject to a user lease, a recourse loan and a security agreement.
Capital should be held where risk exposure exists, and banks selling assets with substantial first-loss recourse continue to be exposed to risks related to the assets.
UPC Wind Partners, LLC ("UPC Wind") announced today that it has closed the first limited recourse loan facility in connection with Clipper Turbine Works, Inc.
As a general rule, commercial real estate loans are non-recourse in nature, meaning the borrower and the principals of the borrower are not personally liable for the debt upon default and the lender's only recourse is to the properly given as security for the loan.