What is the difference between recourse loans and non recourse loans?

With a recourse loan, the lender has recourse to go after the borrower if the security for the loan can't be sold for enough money to cover the full amount of the loan. With a non-recourse loan the lender can only look to the security and can't go after the borrower.

For example, let's say that you find a property and you buy it using a mortgage of $100,000. Then you lose your job and can't make the payments. The lender forecloses on the property and it eventually gets sold for $80,000.

If your mortgage loan was a recourse loan then the lender can sue you for the balance of $20,000. If your mortgage loan was a non-recourse loan then the lender can't sue you for the $20,000.