Could someone help me to understand the below as per my understanding the lender should get $175,000? Because the underlying property is the house or is it not clear from the question?
Q: Fran Martin obtains a non- recourse mortgage loan for $500,000. One year later, when the outstanding balance of the mortgage is $490,000, Martin cannot make his mortgage payments and defaults on the loan. The lender forecloses on the loan and sells the house for $315,000. What amount is the lender entitled to claim from Martin?
A: $0, Because the loan has a non- recourse feature, the lender can only look to the underlying property to recover the outstanding mortgage balance and has no further claim against the borrower. The lender is simply entitled to foreclose on the home and sell it.