Mortgage financing can be an attractive strategy to raise funds without loss of control of the property. With a nonrecourse loan the lender’s only recourse is to seize the property if the loan is not paid. The borrower effectively has a put option on the property. If the property value falls below the loan amount, the borrower can default on the loan, keep the loan proceeds, and “put” the property to the lender.
Question: In real world, will dafault the nonrecouse loan trigger other issue? For example, legal or future credit issue…
Or, it’s just as simple as put option?
Question: In real world, will dafault the nonrecouse loan trigger other issue? For example, legal or future credit issue…
Or, it’s just as simple as put option?