Discussion:When recourse debt becomes nonrecourse debt?

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Discussion Forum Index --> Advanced Tax Questions --> When recourse debt becomes nonrecourse debt?


Discussion Forum Index --> Tax Questions --> When recourse debt becomes nonrecourse debt?

Swheeler (talk|edits) said:

28 March 2012
This might sound crazy, but given the Federal government and many states are not allowing lenders to go after borrowers who refinanced their homes leaving them with recourse debt, wouldn't this then render the debt nonrecourse sine by law the lenders can't go after them? This may be more a legal question I guess.

DaveFogel (talk|edits) said:

28 March 2012
I discussed this in my article “Does a Non-Judicial Foreclosure Convert Debt From Recourse to Non-Recourse?”.

Swheeler (talk|edits) said:

31 March 2012
I should have known you had already addressed this topic. I met with an attorney today to ask where you find the text in the note regarding whether it's recourse or nonrecourse and he said it's not in the note at all, but a matter of law (he didn't use those terms, I just forgot exactly what he said). Thanks for the link. Very interesting topic and I aim to read your article and get better educated.

Only other one I find of real interest are the cap vs exp rules and the new (third try) proposed regs.

WCMirtes (talk|edits) said:

31 March 2012
Dave, your article seemed specific in California, would this article hold true in other states, specifically Michigan?

DaveFogel (talk|edits) said:

31 March 2012
Swheeler, the language in the note that usually makes the loan a recourse loan is "Borrower promises to pay ..." California law (and the laws of some other states) might apply to make the loan nonrecourse, such as section 580b of the California Code of Civil Procedure.

WCMirtes, the article is specific to California. I don't know if Michigan law is similar or not.

Ckenefick (talk|edits) said:

31 March 2012
Hence the phrase "anti-deficiency statute."

Swheeler (talk|edits) said:

3 April 2012
Thanks Dave. I was just repeating what the attorney told me. I would assume that somewhere the state, or the Feds, have passed a law that usurps the 580b law with regards to all the refinanced recourse CA Trust deeds.

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