Finance
What is 'recourse versus non-recourse' debt in Hawaii commercial real estate?
AA. Recourse debt is secured by the property only; non-recourse allows the lender to pursue the borrower's personal assets
BB. Recourse debt allows the lender to pursue the borrower's personal assets beyond the property if they default; non-recourse limits the lender's remedy to the property only✓ Correct
CC. They are the same thing; all commercial debt in Hawaii is recourse
DD. Non-recourse debt has higher interest rates; recourse debt has lower rates
Explanation
With recourse debt, the lender can pursue the borrower's personal assets if the property's value doesn't fully satisfy the debt after foreclosure. Non-recourse debt limits the lender to the property (collateral) only—if the property value is insufficient, the borrower has no further liability. CMBS (commercial mortgage-backed securities) loans are often non-recourse, while local bank loans may be recourse.
Related Hawaii Finance Questions
- In Hawaii, the 'note' in a mortgage transaction is:
- Which federal law requires lenders to provide borrowers with a good faith estimate of closing costs and information about the settlement process for residential mortgage loans?
- What is the primary purpose of FIRPTA as it applies to Hawaii real estate transactions?
- A Hawaii buyer obtains an adjustable-rate mortgage (ARM). What is the 'cap' in an ARM?
- The Truth in Lending Act (TILA) requires lenders to disclose the loan's cost as the:
- A Hawaii borrower pays 2 discount points on a $500,000 loan. What is the total points cost?
- Under the Qualified Mortgage (QM) rule, a borrower's back-end debt-to-income ratio generally may not exceed:
- Under the Community Reinvestment Act (CRA), financial institutions are encouraged to:
Practice More Hawaii Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free Hawaii Quiz →