This study discusses feasibility of introducing a non-recourse mortgage system in Korea, in which lenders can not claim a borrower’s personal assets when the borrower defaults. It also analyzes advantages and disadvantages of the introduction.
We ...
This study discusses feasibility of introducing a non-recourse mortgage system in Korea, in which lenders can not claim a borrower’s personal assets when the borrower defaults. It also analyzes advantages and disadvantages of the introduction.
We argue that borrowers can be protected and can save social cost in the nonrecourse system than they can be in a recourse system. On the other hand, lenders concern about additional credit risks for the new system. With a monte-carlo simulation, this study estimates additional credit burdens for lenders: the estimated burdens are around 0.002307%(analysis1) and 0.007718%(analysis2). We argue that introducing the nonrecourse system in the Korean housing fiance system is feasible.