A loan the lender can collect only from the property pledged for it, not from the guarantor personally, except for listed bad acts.
The OCC’s handbook for examiners describes a non-recourse loan as one where the lender may look only to the collateral for repayment, not to the guarantor, if the loan defaults. If the property sells for less than the balance, the lender absorbs the loss.
That promise has limits. The handbook says such loans usually come with a guaranty that has carve-out provisions, making the guarantor liable for losses caused by certain acts of the borrower, such as fraud or misrepresentation, voluntary bankruptcy, environmental issues, liens the lender did not consent to, waste of the collateral, prohibited transfers and diversion of funds. Commonly, some of those carve-outs make the whole loan full recourse.
Example: a $5,000,000 non-recourse loan defaults and the property sells for $4,200,000. The guarantor owes nothing on the $800,000 gap, unless a carve-out was triggered.
The handbook notes that long-term fixed-rate loans from life insurance companies, pension funds and securitized lenders are commonly non-recourse. A non-recourse lender still underwrites the people behind the loan: the handbook expects a bank’s policy to cover a guarantor’s assets, global cash flow, and direct and contingent liabilities. Banks and credit unions set their own policy on whether to offer it at all.
How it shows up in the data here
Not in any public file. No record here marks a loan as non-recourse. The lender types that commonly offer it, such as securitized and other non-bank lenders, appear on this site only where they file HMDA or SBA records. Use loan comps for multifamily to see non-bank lenders active near you.
Go further
- Multifamily loan comps: Lenders that made apartment loans, including non-bank lenders that file HMDA.
- Search non-bank lenders: Non-bank lenders in the HMDA and SBA files.
- Guarantor strength and recourse, explained: A guaranty is the lender's second way out. Whether you sign one, how much it covers and what the lender checks before accepting it shape a commercial loan as much as the rate does.
Related terms
- Recourse: A lender's right to collect a loan from the borrower or guarantor personally, beyond the property or other collateral pledged for it.
- Carve-out guaranty: A guaranty on a non-recourse loan that makes the guarantor personally liable only if the borrower commits listed acts, such as fraud or a voluntary bankruptcy.
- Guarantor: A person or company that promises to repay a loan if the borrower does not. On a loan to an LLC or corporation, the guarantor is usually an owner.
- CMBS conduit loan: A commercial property loan made to be pooled with other loans and sold to investors as commercial mortgage-backed securities, not kept by the lender that made it.
- Life company lender: A life insurance company that makes long-term, fixed-rate commercial mortgage loans with its own investment money and usually keeps them.
- Agency lender: A lender authorized to make apartment loans that Fannie Mae or Freddie Mac then buys or backs, under those companies' rules instead of the lender's own.
- Debt yield: Net operating income divided by the loan amount, shown as a percent. It measures how much income stands behind each dollar lent, whatever the rate or term.
Sources
Plain definitions for orientation, not legal, tax or credit advice. A lender's own policy decides what it will do.