Beware of this clause. Your lender could come after you!
The "Recourse Clause" is a section of the promissory note that gives the lender the option to file a claim against you and all co-signers on the loan.
That is, if the sale of your property does not generate enough money to satisfy the outstanding loan. This section may or may not be included in your promissory note, which is part of your loan package and establishes your promise to pay off the loan.
In most states however, the lender is granted the option to file a claim against you, the homeowner. In this case, not only you lose your home but you may also be responsible for the payment of this judgement in the future. Even if the lender accepts a "Deed-in-Lieu-of-Foreclosure" or approves a Short-Sale, they can still seek a deficiency judgement against you and all other borrowers on the loan. This is why it's imperative that you research your home foreclosure options based on the foreclosure laws of your state and on the terms of your Deed of Trust or Mortgage Agreement and consult with your attorney about the best solution for your specific case. If your promissory note however, does not have this clause, then you have a Non-Recourse loan which means that the lender cannot file a deficiency judgement claim against you, so long as your property is your principal residence.
Foreclosure Law: Find out what each state's foreclosure laws are. Here you can find if and where the recourse clause is relevent.
Foreclosure Attorneys: Here we have an extensive list of foreclosure attorneys around the United States. Many offer free consultations and, therefore, there is no risk in getting in contact with an attorney today to answer the many questions you may have.
Deficiency Judgment: Allows lenders to get a judgement against you in the amount of the deficiency after a sale at auction. Read more about it here.