Jeff DeHarty talks recourse lending with Connect CRE
DENVER (July 5, 2023) — Jeff DeHarty, a senior vice president in Northmarq’s Denver office, was recently interviewed and featured in the Connect CRE article, “Is recourse lending really THAT scary?”
Recourse financing allows a lender to seize assets if a borrower defaults on a loan.
As a result of recent lender pull back, recourse lending is also affecting non-recourse agreements.
“Banks, credit unions and a few life insurance companies have typically required some levels of personal guarantees within their loan structures,” DeHarty said.
Some recourse lenders, DeHarty explained, have complied to limited structures allowing burn-off provisions relative to project performance, but lenders lately are less open to considering those levels. “Complete recourse burn-off is less available,” he said.
Recourse lending should interest lenders and borrowers. DeHarty shared that “a borrower’s willingness — or lack thereof — in providing personal loan repayment guarantees can affect a variety of loan terms.”
For borrowers, recourse can be beneficial, but DeHarty said “commercial real estate owners should be cognizant of the downside risks associated with recourse loans and at what levels of recourse they’re willing to provide.”
Topics covered in the article include:
• Non-recourse lenders.
• Benefits of recourse lending.
• Risks for borrowers.
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Northmarq is a full-service capital markets resource for commercial real estate investors, offering seamless collaboration with top experts in debt, equity, investment sales, loan servicing, and fund management. The company combines industry-leading capabilities with a flexible structure, enabling its national team of experienced professionals to create innovative solutions for clients. Northmarq’s solid foundation and entrepreneurial approach have built a loan servicing portfolio of more than $76 billion and a two-year transaction volume of $52 billion. For more information, visit www.northmarq.com.