Which is better (our opinion)? There is not a simple answer to this question. A non-recourse loan is ideally suited to a commercial property that is rented where the borrower has no control over the business activities of the tenant. Should the business tenant default on his rent payments such that the borrower is unable to make the mortgage payments, the lender can only foreclose on the tenanted property.

During times of economic prosperity and stability, non-recourse loans are less relevant. Property values increase, so even if a default on the debt occurs, the property can be sold and the proceeds more than likely will cover the balance of the loan. However, during periods of economic downturns and market weakness, non-recourse loans become much more important than recourse loans when considering a purchase or refinance.