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A loan whereby the lender, in the event of a default, has recourse beyond the
collateral pledged to initially secure it. For example, John gave Brian a $50,000 recourse loan
using Brian's house as collateral. When John defaulted on the loan, he only had $25,000 of equity
remaining after the property was foreclosed upon by the mortgagee of a first mortgage coupled with
depressed real estate market conditions. Under the terms of the recourse loan, John has recourse to
Brian's other assets to recover the principal.