The Trulia post indicates "Foreclosure in 94080," and although your question seems to be less about foreclosure and more about certain aspects of loans with or without recourse, let's start by answering what a recourse loan represents, because, many who financed a home purchase or refinanced an existing mortgage loan know little about this term or its significance.
Recourse loans are loans that allow the lender to come after you in case you default. They get their name from the fact that lenders have power. They are allowed to go after you for amounts that you owe - even after theyâ€™ve taken collateral. If you default on a recourse loan, the lender can bring legal cases against you, garnish your wages, and try to collect the amount you owe.
A non-recourse loan does not allow the lender to pursue anything other than collateral. For example, if you default on your non-recourse home loan, the bank can only foreclose on the home. They generally cannot take further legal actions against you. The bank is out of luck even if the sale proceeds do not repay the loan.
Now, if you are facing foreclosure and do not know if your loan is or is not a recourse loan, you would be well advised to check your original loan papers (the ones you should have received when you purchased or refinanced your properties), and look specifically for the promissory note or something sounding like that. In it you'll find the terms spelled out, but keep in mind that some of these notes are spelled out over a number of pages, so you have to know where to look. A friendly Realtor might be able to help you find this for a minimal cost, or gratis.
In the current economic climate many lenders, even when they have recourse loans on the book are now willing to discuss options and alternatives that may modify their rights in cases where the properties are under water or the owner faces imminent foreclosure. However, in order to establish that dialogue, the borrower has to have a compelling argument and the bank a willingness to negotiate with you. The key to this alternative is that the borrower can show some cause that the lender will accept, AND prove that s/he will be able to honor the revised commitments to the lender under a new agreement, but this is a topic for another discussion.... more