Nonrecourse carve-out guaranties are personal guaranties issued in connection with mortgage loans where the lender’s recourse for repayment is limited to the mortgaged real estate. Nonrecourse carve-out guaranties are used in connection with commercial mortgage-backed securitized loans, commonly referred to as CMBS loans. They are also a prominent feature of Freddie Mac and Fannie Mae multifamily loans, loans made by life companies and by many other nonbank lenders.
The nonrecourse carve-out guaranty provides the lender with recourse to an entity or a warm body with assets, who will be liable to the lender for certain acts or violations of the loan documents. However, unlike a payment guaranty, a nonrecourse carve-out guaranty does not impose liability on the guarantor for nonpayment of the loan by the borrower.
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