About Loan with financed property guarantee
While the requirement to provide a personal guarantee varies by lender, sometimes it is required to close the deal. When that happens, it is important to understand the different options available in order to make the best decision for all parties.
The empréstimo com garantia de imóvel financiado common option is a non-recourse loan, where the collateral acts as the primary source of repayment. In the event that the property cannot meet its obligations, the lender can sell the property and use the proceeds to repay the outstanding balance. In cases where the sales proceeds are insufficient, a tertiary source of repayment is the guarantor’s personal assets, which is why many lenders require each guarantor to complete a personal financial statement that outlines their cash, stock and house balances along with their credit card, auto and home loan balances.
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Another option is a limited personal guarantee that places a cap on the amount of liability that each guarantor is responsible for. This type of guaranty is commonly used in commercial real estate development projects with a significant lease-up component. Finally, there are the agency backed loan options, which typically are non-recourse and are provided by government agencies, like the Small Business Administration (SBA), FNMA or USDA.