Fixed Income Q66

0. Maria obtains a non-recourse mortgage loan for PKR 8,000,000. Three year later, when the outstanding balance of the mortgage is PKR 5,000,000, Maria cannot make her mortgage payments and defaults on the loan. The lender forecloses and sells the house for PKR 3,750,000. What amount is the lender entitled to claim from Maria?

Answer
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Option : A
Explanation : For a non-recourse loan, the bank can only look to the underlying property to recover the outstanding mortgage balance and has no further claim against the borrower. The bank is simply entitled to foreclose on the home and sell it.

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