The following states have anti-deficiency laws: Alaska, Arizona, California, Connecticut, Hawaii Iowa, Minnesota, Montana, Nevada, New Mexico, North Carolina, North Dakota, Oregon, Washington, and Wisconsin.
What does non-recourse mean in real estate?
Non-recourse debt is a type of loan secured by collateral, which is usually property. If the borrower defaults, the issuer can seize the collateral but cannot seek out the borrower for any further compensation, even if the collateral does not cover the full value of the defaulted amount.
Are there any states that have non recourse laws?
Each state implements “non-recourse” or “anti-deficiency” laws differently. As of this writing, the following states have some form of non-recourse or anti-deficiency law: Alaska, Arizona, California, Connecticut, Iowa, North Carolina, North Dakota, Minnesota, Montana, Oregon, and Washington.
What are the benefits of non-recourse States?
Washington If you so happen to own property in one of these states, and have substantial assets elsewhere, you can legally hand over the keys to the bank and exonerate yourself from the mortgage with no penalty against your other assets! The Benefit Of Non-Recourse States
What happens in a non recourse loan state?
Generally, in a non-recourse state, if a lender cannot recoup its loan from the sale or seizure of the asset used for collateral, then the relevant state law will limit the lender’s ability to collect from the borrower. In a non-recourse state, if you default on your home loan, the bank can only foreclose on the home.
What happens if you turn over your house in a non recourse state?
$300,000 of your mortgage is now unsecured ($700K mortgage balance – $400K value of property), which means your house is now an under-secured debt. Because you live in a non-recourse state, if you turn over the collateral (your house), your lender cannot collect on the $500,000 unsecured debt.
