Pronunciation: [nˌɒnɹɪkˈɔːs] (IPA) 
Nonrecourse is spelled with the prefix "non-" which means "not" and the word "recourse" which refers to the ability to recover something. The word is pronounced /ˌnɑn.rɪˈkɔrs/ and can be broken down into three syllables: non-re-course. The emphasis is on the second syllable, "re." This term is commonly used in finance and refers to a type of loan in which the borrower is not personally liable for repayment if they default.
Nonrecourse is an adjective that refers to a type of loan or financial arrangement in which the lender's only recourse or claim for repayment is the collateral or asset that was used as security for the loan. In nonrecourse loans, the borrower is not personally liable for any shortfall in repayment if the asset's value does not cover the outstanding loan amount.
In such cases, if the borrower defaults on the loan and the value of the underlying collateral is insufficient to fully satisfy the debt, the lender is limited to seizing and selling the collateral to recover the outstanding amount. The lender cannot pursue the borrower's personal assets beyond what is secured by the collateral.
Nonrecourse arrangements are most commonly associated with mortgages for real estate properties. If a property is foreclosed upon and sold for an amount less than the outstanding mortgage balance, the lender is typically unable to go after the borrower's other assets to recover the shortfall. The lender's recourse is limited to the value of the property itself.
Nonrecourse offers borrowers a level of protection, as it limits their personal liability and shields their other assets from potential claims by lenders in the event of default. It also encourages lending for large, long-term projects by shifting some of the risks onto the collateral. However, for lenders, nonrecourse loans involve higher risks, as they may not be able to recoup their entire investment in case of default.
The word "nonrecourse" originated from the combination of two distinct terms: "non" and "recourse".
The prefix "non" is derived from the Latin word "non", meaning "not" or "without". It is commonly used in English to indicate negation or absence of a particular quality or characteristic.
The word "recourse" comes from the Old French term "recours", which is based on the Latin word "re-", meaning "back" or "again", and "cursus", meaning "course" or "track". "Recourse" refers to the act of turning or returning to someone or something for assistance or support. In legal terms, it specifically denotes the right to initiate a legal action or seek redress.
