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Updated over 9 years ago,

User Stats

195
Posts
100
Votes
Jimmy Klein
  • Investor
  • Houston, TX
100
Votes |
195
Posts

My friend defaulted on full recourse loan and have a question

Jimmy Klein
  • Investor
  • Houston, TX
Posted

Ok so here is the summary. A class C apartment was bought by my friend not too long ago. I invested 20% as a silent partner and there are two other partners. The loan balance when the complex was bought was $2 million. The apartment was unable to service its debt about a year in. So the bank tried to renegotiate the principal with us. We took an additional haircut of $200k on principal from $1.9 million (outstanding balance at time) to $1.7 million. The property was still underperforming and the bank sold the note to a private buyer for $1.3 million. The loan is full recourse with personal guarantees. My question, can the bank still come after us even after the note is sold. The bank took a total hit of 600k ($200k from cut and a loss on sale of the note). Are the banks tough in enforcing these full recourse guarantees even if they no longer hold the note? 

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