Fran Martin obtains a non-recourse mortgage loan for $500,000. one year later, when the outstanding balance of the mortgage is $490,000, Martin cannot make his mortgage Payments and defaults on the loan. The lender forecloses on the loan and sells the house For $315,000. What amount is the lender entitled to claim from Martin?
A) $0.
B) $175,000.
C) $185,000.

Question

Quizplus · Accepted Answer

In a non-recourse mortgage loan, the lender's only recourse in case of default is to foreclose on the property and sell it. The lender cannot pursue the borrower personally for any shortfall between the sale proceeds and the outstanding loan balance. Therefore, the lender cannot claim any amount from Martin beyond the proceeds from the sale of the house.

Fran Martin Obtains a Non-Recourse Mortgage Loan for $500,000