Although nonrecourse loans dominate the commercial mortgage lending practices of pension funds, life insurance companies, and commercial mortgage-backed security (CMBS) originators, banks are likely to require some form of a guarantee by the organizer/sponsor of the investment opportunity to make the lender whole in the event the lender suffers a loss on the loan. This protection to the lender is more commonly referred to as a:

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Credit enhancement is a form of protection that lenders require from the borrower or sponsor to safeguard their investment. It is a way to reduce the risk of default on the loan and can take the form of collateral, a letter of credit, or a guarantee from a third party. Mezzanine loans, joint ventures, and property externalities are not related to credit enhancement.

Although Nonrecourse Loans Dominate the Commercial Mortgage Lending Practices of Pension