Recourse vs Non-Recourse
How rare are recourse loans vs non-recourse loans in terms of percentages of total CRE loans(e.g 50%Recourse, 50%Non-Recourse)?
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Do you mean the industry as a whole, or a certain lender?
Let's say both. With Regards to overall CRE market and then among subdivisions.
Rarely will you see perm loans that are recourse. In the construction/bridge space it is very dependent on what market you are in. If it is a primary market with large institutional sponsors then you will see few recourse loans if any. In smaller markets recourse construction lending is the norm- I'd say over 50% are recourse. However I think there has been a definite shift from recourse to non recourse even in smaller markets at the expense of lower proceeds and higher pricing.
I'm not sure about percentages. I know bigger deals in the $20mil plus range tend to be non-recourse because of so many investors/sponsor as well as possibly a private equity player is on the deal as well.
Something to consider...the nations largest multifamily lender is Chase. They're doing a ton of mid market deals in the $1mil to $10mil range. Nearly 100% of those loans are recourse. Meanwhile, FNMA/Freddie do a ton of deals as well and are non recourse.
I can say with a certainty that nearly all regional bank and CU loans are recourse. When you drive down the street in any town and see local banks and credit unions, keep in mind those are serious players with local CRE lending. All those deals are full recourse. These are not huge loans...mid market.
I know one of two nyc credit unions/local banks that do non-recourse and no prepayment penalty.
Wow that's impressive. Never seen non-recourse out here in CA. No prepay for sure.
To get into it, what is non-recourse anyway? It is still subject to the same "bad-boy" carve-outs which would enact a form of recourse is you violate those covenants.
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