Answer: Higher than for a recourse mortgage.

For a non-recourse mortgage, the borrower may have an incentive to default on an underwater mortgage and allow the lender to foreclose on the property, even if resources are available to continue making mortgage payments. This behavior is termed a "strategic default." In contrast, in countries where residential mortgages are recourse loans, a strategic default is less likely because the lender can seek to recover the shortfall from the borrower's other assets or income. Therefore, the risk of a strategic default is higher for a non-recourse mortgage compared to a recourse mortgage.

Author: LeetQuiz Editorial Team