Recourse

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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 ?
(12.) Panel Report, Second Recourse to Article 21.5 of the DSU by the European Communities, United States--Tax Treatment for "Foreign Sales Corporations," [paragraph] 1.1, WT/DS108/RW2 (Sept.
1423 [hereinafter Jobs Act]; See also AB Second Recourse, supra note 4, [paragraph] 6 (summarizing amendments of United States law attempting conformity with WTO obligations).
(20.) AB Second Recourse, supra note 4, [paragraph][paragraph] 9-10 (enacting section 101 of Jobs Act maintains prohibited subsidies through transitional and grandfathering provisions).
(23.) AB Second Recourse, supra note 4, [paragraph][paragraph] 93 (discussing proper scope of Panel tasks); See also Appellate Body Report, Mexico--Anti-Dumping Investigation of High Fructose Corn Syrup (HFCS) From the United States (Article 21.5--US), [paragraph][paragraph] 121-24, WT/DS132/AB/RW (Oct.
In relevant part, Article 21.5 provides that: "[w]here there is disagreement as to the existence or consistency with a covered agreement of measures taken to comply with the recommendations and rulings such dispute shall be decided through recourse to these dispute settlement procedures, including wherever possible resort to the original panel." Id.