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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.


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.


(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 classic literature ?
They are compelled, therefore, to have recourse to those houses whose history contains moving incidents like these.
You must know there are two ways of contesting,[*] the one by the law, the other by force; the first method is proper to men, the second to beasts; but because the first is frequently not sufficient, it is necessary to have recourse to the second.
Indeed, it seems that in defining contraries of every kind men have recourse to a spatial metaphor, for they say that those things are contraries which, within the same class, are separated by the greatest possible distance.
Oubliettes are employed as a means of kingly vengeance, and a low-born fellow such as he is would not have recourse to them.