Talk:Nonrecourse debt

Bad notes

1. ^ United Nations (2009). Forest Products Annual Market Review 2008-2009. United Nations Publications. p. 42. ISBN 978-92-1-117007-8. http://books.google.com/books?id=_IfBkdm_DToC&pg=PA42.

Leads to something unrelated to this subject — Preceding unsigned comment added by 209.78.16.77 (talk) 01:54, 20 January 2013 (UTC)

Merge voting

Nonrecourse debt and Non-recourse debt seem to be the same thing. Decide on which term is better and we can merge it there. Ted 01:56, 8 June 2006 (UTC)

Use Non-recourse debt

Add here if you want this the main article. Use "*" for each line for proper formatting.

• Whether it is nonrecourse or non-recourse debt, it is difficult to find without the "debt." I searched for nonrecourse, recourse, nonrecourse claim, and recourse claim without finding the webpage. Maybe these can be established as redirects? Schmorrell (talk) 21:41, 11 December 2007 (UTC)

Use Nonrecourse debt

Add here if you want this the main article. Use "*" for each line for proper formatting.

• This is Boundlessly, the author of non-recourse debt. I have merged my work into nonrecourse debt. Redirect non-recourse debt to this page. —Preceding unsigned comment added by 207.237.138.184 (talk • contribs)

  I would feel more comfortable if you signed in as Boundlessly and posted this. I'm that kind of person. :( Ted 02:50, 8 June 2006 (UTC)

• This all seems to be in order. The articles appear to be already merged and the person who created the other version of the article wants this one as well.--SomeStranger ^(t|c) 04:03, 8 June 2006 (UTC)

Tax consequences

Famspear, Thanks for taking a crack at cleaning up the discussion of Crane, Tufts and Woodsam in nonrecourse debt. But it still doesn't make sense. Could you take another look? When are we talking about the creditor, and when are we talking about the debtor? Boundlessly 20:47, 27 June 2007 (UTC)

I agree; I have done a semi-major reworking, and eliminated some of the confusing language. Yours, Famspear 22:13, 27 June 2007 (UTC)

Famspear, excellent job! I was in progress of doing the exact same kind of edit. When I tried to save it I got the error message of someone else editing the section.EECavazos 22:20, 27 June 2007 (UTC)

Thanks. Famspear 00:18, 28 June 2007 (UTC)

Borrowing against the property but not investing the proceeds in the property

Dear Boundlessly: Subsequent borrowing against the property (after you own it), using the property as collateral, has no effect on basis in the property. Remember, even the original financing ITSELF has no direct effect on basis. The reason that borrowing money indirectly gives you basis is that you INVEST THE LOAN PROCEEDS in the property itself.

Think of it as accounting debits and credits.

Original purchase, at 100% financing, of a $100,000 property:

Debit: Investment in property $100,000 Credit: Loan payable $100,000

Subsequent borrowing of, say, $5,000, using the property as collateral, and using the $5,000 to take a Las Vegas vacation:

Debit: Cash (or non-deductible personal living expenses - vacation) 5,000 Credit: Loan payable 5,000

Since the $5,000 didn't go into the property, it doesn't affect basis. Essentially, it's the DEBIT side of the entry that gives you basis, not the credit side. Yours, Famspear 21:45, 3 July 2007 (UTC)

By the way, it doesn't matter whether the debt is recourse or nonrecourse. If you borrow money against the property but you do not invest those proceeds IN THE PROPERTY, your borrowing has no effect on basis.

Similarly, in the example of above, if you later PAY OFF the debt against the property (reducing the debt to zero), that payoff of the debt does not increase your basis - the payoff has absolutely no effect on basis. When you pay a debt you are not really "paying off the property" (indeed, "paying off the property" here is just a figure of speech). You are paying off the debt. Remember, your basis in the example above was already $100,000. Paying off the debt of $100,000 (or $105,000 or whatever) would not increase your basis by $100,000. If it did, your total basis would end up as $200,000 (or $205,000, or whatever). That would make no sense.

Again, it's not the BORROWING ITSELF that gives you basis or increases basis. And it's not the payoff itself that decreases basis. Yours, Famspear 21:58, 3 July 2007 (UTC)

Dear whoever wrote this,
this section is meaningless,
basis refers to the income tax related costs of a property minus any receipts that are not income.
It has nothing to do with financing.

Example: If you buy a house for $200,000 and make an addition to the house costing $60,000, your basis is $260,000. When you sell the property you subtract your basis from the sales price.
If the profit is less than $250,000 for a single person and other tests are met, no tax is due.
If the profit is more than $250,000, the amount over $250,000 is taxable capital gains.

Simple remodeling or maintenance is not a capital addition that would add to basis.

— Preceding unsigned comment added by 209.78.16.77 (talk • contribs)

Dear user at IP 209.78.16.77: I'm not sure what you mean by "meaningless." The material is not "meaningless."

Your own commentary is pretty much correct, except that you would have to define "simple remodeling." That is, the cost of "remodeling" (simple or otherwise) might or might not be a capital improvement, and might or might not be something that could be added to the basis amount.

I would agree with you that minor maintenance of a personal residence (mowing grass, cleaning windows, etc.) generally would be considered a non-deductible personal expense. Such maintenance would not be a capital addition, and thus the cost of that maintenance would not be added to the basis amount.

The discussion above, however, was really about a slightly different aspect of "basis." Famspear (talk) 02:30, 20 January 2013 (UTC)

A lender of non-recourse debt depends crucially on an accurate assessment of the credit of the borrower, and a sound knowledge of the underlying technical domain as well as financial modeling skills.

I removed that from the first paragraph because non-recourse lending is supposed to remove the borrower's ability to pay or lack thereof from the equation entirely. —Preceding unsigned comment added by 71.135.118.176 (talk) 22:23, 23 August 2008 (UTC)

Removed ongoing spam -- June 2010

I have again removed spam edits and links that continue to be added/reverted despite repeated requests for discussion. Edit summaries are not substitutes for discussion, and ongoing willful ignorance of Wikipedia policies is wearing thin. Flowanda | Talk 07:28, 8 June 2011 (UTC)

The association part is not mine, so I removed it, it did look like spam. However, all other links are verified by myself, an attorney barred in PA and NJ, as well as by existing public documents and case law that I reference on my website. It is not willful ignorance, I understand the Wikipedia policies. Nevertheless, all information asserted on my website is independently verifiable, drafted by an attorney and references legal scholarly work. --Schytzophrenic (talk) 20:57, 15 June 2011 (UTC)

Has anybody looked at the second paragraph of this page? It sounds like one person's personal attack on the article. — Preceding unsigned comment added by 24.131.244.198 (talk) 19:59, 26 July 2011 (UTC)

Nuked it along with all other mention of lawsuit financing. The opening sentence was worded to imply that "nonrecourse loans" and "lawsuit loans" are the two major kinds of loans, which is simply wrong. There is no reason for lawsuit loans to be mentioned here. 69.107.204.78 (talk) 05:48, 25 October 2011 (UTC)

Debt forgiveness in Europe

Article states that mortgage debt forgiveness is enforced in much of Europe after eviction - taken from the source at n.2 - but the source is very brief on what is a complicated point.

(new entry, the above was not signed) Agreed, this should be removed, unless more details and sources are given. In Germany, the biggest economy in the EU, nonrecourse loans without personal liability are unknown, and forgiveness after eviction is also basically unknown. Any remaining debt after foreclosure stands for 30 years. There is of course a private insolvency/bankruptcy system with a 6 year period during which every cent above a certain minimal income goes to the creditors. Also, AFAIK, there are states in the US that do not allow non-recourse loans. Is there anyone who has more details on this and can add something? This seems very essential information and is of course highly relevant after since the housing crisis in the US....87.78.8.224 (talk) 18:04, 22 March 2013 (UTC)

I do not think the reference or the statement should be removed. I understand that most likely the Irish Times is incorrect; I understand that, at least in Germany, "deficiency judgments" are allowed and are commonplace. It gives housing crises an added importance in places like Germany, whereas in California people go on with their lives with little issue. But it is a reliable and verifiable source. The fact that not even the major newspapers have any clue goes a long way to show the state of affairs in Europe with regards to the issue. (The Bible: The book everyone has, but no one has read. The Law: The book no one has or can afford to buy and often is not even printed, but apparently everyone has read. Ignorance is no excuse, so they say.)

I have also added a reference that shows even in the United States they are not so commonplace, and with caveats. The most common caveat is that deficiency judgments are limited by property's fair market value. California, as I understand the law, is actually more complex, as its a "single action" state; after the creditor/lien-holder enters judgement for a foreclosure/trustee's sale, the game is up. They must either seize the security interest (claim ownership of the property) or enforce the debt (get a judgement for moneys owed, and possibly attach a lien to the house to enforce it whenever the owner decides to sell the house, if at all), but apparently cannot do both (security first rule). That alone makes the loans non-recourse, but I think it is specific towards residential housing. And of course, this, as many people do not understand, only covers the senior lien or whatever (the main loan); the debtor is liable for any refinancing loans. (Now you know why they are so keen on "helping" you refinance!) You're on the hook personally for any refinancing. I'm reading "The Sanction for Violation of California's One-Action Rule" in the California Law Review, and it's abstract sums it up nicely:

Commonly referred to as the one-action rule, section 726(a) most obviously aims to prevent a real property secured creditor from suing the defaulting debtor on the indebtedness itself prior to foreclosing on the security interest. If the debtor in the situation described does not raise the one-action rule as an affirmative defense and if the creditor obtains a personal judgment on the debt, the one-action rule would forever bar the creditor from foreclosing on the security interest.

Int21h (talk) 20:29, 24 August 2013 (UTC)

And I should also note, assuming what your saying is true, that Germany forgives the debt after 30 years, then the Irish Times article would also be technically correct with respect to Germany: Germany forgives mortgage debt after eviction. Of course the part they leave out is that your almost dead when it is forgiven, and it may cost a house or two to pursue such an action in court. But hey, technically, German does. But I agree, such statements are misleading. Int21h (talk) 20:40, 24 August 2013 (UTC)

We may want to think about weakening the statement herein. Maybe "it has been said that" or something, given that the reference is weak, and the assertion is seriously in question. Int21h (talk) 21:35, 29 August 2013 (UTC)

Non-recourse loans are peculiar to America, and a primary cause of the GFC. The reference to Europe should be deleted, it adds noting and is confusing. Most of Europe does not have non recourse lending (none of it does), nor do they "enforce mortgage debt forgiveness after eviction". There is no evidence to support the claims made in the articleRoyalcourtier (talk) 09:03, 6 February 2015 (UTC)

Merge with Nonrecourse liability

I think Nonrecourse liability should be merged into this article. Its only source is a codified federal regulation, and I don't think its a subject fit for its own article. Int21h (talk) 19:28, 24 August 2013 (UTC)

There is no significant difference between the two terms and, yes, the two articles should be merged. Famspear (talk) 19:45, 24 August 2013 (UTC)

Bah. I'm not even sure if that article can be "merged". It merely cites a regulation concerning taxation and partnership liabilities vis-a-vis "at risk" recourse/nonrecourse debt. The regulation cited does not even say anything important other than define the term by reference. I say we merge it by just redirecting it here. Int21h (talk) 05:58, 25 August 2013 (UTC)

I have done it. Int21h (talk) 09:39, 29 August 2013 (UTC)

"Most of Europe enforces mortgage debt forgiveness after eviction.[4]"

I'm not sure this statement - or the source quoted - is accurate. Here is an article published by the St. Louis Fed implying that most European mortgages are recourse debt - ie, not forgiven.

https://www.stlouisfed.org/Publications/Regional-Economist/July-2013/Europe-May-Provide-Lessons-on-Preventing-Mortgage-Defaults#endnotes

First time editing anything on Wikipedia, so apologize for breaches of etiquette Mfriedrichs12 (talk) 13:37, 18 February 2015 (UTC)

Assessment comment

The comment(s) below were originally left at Talk:Nonrecourse debt/Comments, and are posted here for posterity. Following several discussions in past years, these subpages are now deprecated. The comments may be irrelevant or outdated; if so, please feel free to remove this section.

==WP Tax Class== Start class because needs more citations. Could also be globalized.EECavazos 06:55, 31 October 2007 (UTC) ==WP Tax Priority== Mid priority because important concept and probably applicable in many different countries.EECavazos 06:56, 31 October 2007 (UTC)

Last edited at 06:56, 31 October 2007 (UTC). Substituted at 01:27, 30 April 2016 (UTC)

Merge "Recourse debt" into this article

The article Recourse debt is quite short, and mostly repeats what is said here. This makes sense as recourse debt is simply the opposite of non-recourse debt.

So I propose merging the article "Recourse debt" into this article. Sebastian (talk) 11:00, 11 April 2024 (UTC)