Non-Recourse Expense


DEFINITION of 'Non-Recourse Expense'

An accounting term that sometimes refers to the cost of absorbing losses on defaulted non-recourse debt. In other words, when a borrower fails to repay a non-recourse loan, the lender's only possible recourse is to seize any pledged collateral and sell it. The loss that results between what the asset is sold for and what is actually owed is written off as a non-recourse expense, but there can be variations in the name of this line item.

BREAKING DOWN 'Non-Recourse Expense'

While non-recourse expenses are most often associated with certain types of home mortgages, they are also found on the books of small businesses. Also, sometimes investors will take out non-recourse loans to fund IRA investments, which are secured by their property. Should the borrower default, the lender will seize the property and try to recover the loan amount, and any losses will be non-recourse expenses.

  1. Full Recourse Debt

    A guarantee that no matter what happens, the borrower will repay ...
  2. Default

    1. The failure to promptly pay interest or principal when due. ...
  3. Limited Recourse Debt

    A debt in which the creditor has limited claims on the loan in ...
  4. Non-Recourse Debt

    A type of loan that is secured by collateral, which is usually ...
  5. Non-Recourse Finance

    A loan where the lending bank is only entitled to repayment from ...
  6. Encumbrance

    A claim against a property by a party that is not the owner. ...
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  1. What is the difference between a non-recourse loan and a recourse loan?

    The essential difference between a recourse and non-recourse loan has to do with which assets a lender can go after if a ... Read Full Answer >>
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    A company accrues unpaid salaries on its balance sheet as part of accounts payable, which is a current liability account, ... Read Full Answer >>
  3. What is a profit and loss (P&L) statement and why do companies publish them?

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