Recourse Vs Non-Recourse
Recourse Vs Non-Recourse
Laura gets Paul Whetten VP of Lending at American Life Financial to explain the good, the bad and the ugly of Recourse and a Non-Recourse loans. This interview gets personal.
Opening: "I'm Laura Munoz and welcome to Let's Talk Commercial Real Estate a newly created video blog covering topics of interest for commercial brokers and borrowers sponsored by American Life Financial. We'll be chatting with members of the real estate community asking them questions that you use submit on social media."
Laura Munoz: "Hi I'm Laura - Welcome to Let's Talk Commercial Real Estate, today we have Paul Whitten, vice-president of lending at American Life Financial, thanks for coming today."
Paul Whetten: "Thanks for having me"
Laura Munoz: "We're happy to have you, we have this driving question from the audience and the question is can you tell us a little bit about recourse loans versus non-recourse loans."
Paul Whetten: "Okay I know that there's a lot of passion around this subject I will try to keep it toned down here, a recourse loan is where the borrower is on the hook for the balance of a loan should the loan go into foreclosure so in many cases when you have a commercial loan if there's a foreclosure and the lender sells the property later on there's still a balance left on the loan and so the lender would then be able to go after the borrower to collect those excess funds. A non-recourse loan is where upfront the lender agrees that should that scenario arise where they foreclose on a property and sell it and aren't able to get enough funds to cover the loan that they will not go after the borrower personally they can go after the company but not the personal assets of the people that signed the loan and so that's the difference in a recourse no non-recourse."
Laura Munoz: "So American Life Financial seems to offer non-recourse loans?"
Paul Whetten: "Correct any loan that is in the name of a corporation is potentially a non-recourse loan in fact most of the time it will recourse loan in some cases where we might feel that there needs to be a little more security we may require that it be a recourse loan, but that's the exception not the rule."
Laura Munoz: "Okay all right so I have one more question let's not talk about finance for a minute this morning I understand you taught a class?"
Paul Whetten: "Yes"
Laura Munoz: "Where and what was it about?"
Paul Whetten: "I teach an Introduction to Business class at Mesa Community College. I've been doing this for 3 and 1/2 years it's fun because I'm able to take the real-life experiences I have here my day job, if you will, and talk with my students about okay so here's the theory and here's what it looks like in practice and and it's been a great experience I like it I usually come back to work fairly energized because they're they're a good group of young people and it's fun to be around them I don't feel quite as Old"
Laura Munoz: "So, you’re professor?"
Paul Whetten: "I am"
Laura Munoz: "That's fantastic well thank you so much for being with us today so much I learned a lot personally and I'm sure our audience had their questions answered."
Paul Whetten: "Okay thank you,"
Laura Munoz: "We’ll have you back thank you very much."
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