Which clause prohibits the lender from seizing any property outside of the property that the loan was secured with?

Which clause prohibits the lender from seizing any property outside of the property that the loan was secured with?

• A. Recourse Clause
• B. Mortgage Subordination Agreement
• C. Exculpatory Clause
• D. Non-Recourse Clause

Answer: (D)

A non-recourse provision limits the lender’s remedies to the property that secures the loan. If the borrower defaults, the lender can foreclose on that collateral but cannot go after the borrower’s other assets or income to recover any deficiency. That’s exactly what the clause does: it prevents seizure of property beyond the secured property. In contrast, a recourse clause would allow the lender to pursue the borrower's other assets for any shortfall; a mortgage subordination agreement only changes the order of lien priority; an exculpatory clause releases the borrower from liability in certain situations but doesn’t restrict the lender’s ability to seize assets beyond the collateral.

A non-recourse provision limits the lender’s remedies to the property that secures the loan. If the borrower defaults, the lender can foreclose on that collateral but cannot go after the borrower’s other assets or income to recover any deficiency. That’s exactly what the clause does: it prevents seizure of property beyond the secured property.

In contrast, a recourse clause would allow the lender to pursue the borrower's other assets for any shortfall; a mortgage subordination agreement only changes the order of lien priority; an exculpatory clause releases the borrower from liability in certain situations but doesn’t restrict the lender’s ability to seize assets beyond the collateral.