Non-Recourse Loan

A loan that is secured by a pledge of collateral (such as the borrower’s house or other property), for which the lender agrees to rely solely on the collateral if the borrower fails to make the required payments of principal and interest. The lender has no recourse to other assets of the borrower and cannot insist on any further compensation, even if the lender does not receive the full amount of the loan from the value of the collateral. The borrower can fulfill the obligation to repay the loan by surrendering the collateral.