
Non-Recourse Mortgage Loans May Not Be Non-Recourse
Commercial mortgage-backed securities (CMBS) or Conduit loan borrowers would likely be startled to learn that their so-called “non-recourse loans” may not be non-recourse after all when there is a payment default. Contrary to what Conduit borrowers would reasonably believe they had bargained for, a simple payment default (not caused by any fraud, misapplication of funds or other “bad boy” acts) could result in full borrower responsibility for repayment of any deficiency.
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