In China, housing loans are subject to unlimited liability, or a recourse loan. In the event of default, the owner's property may be forced to be auctioned by the bank. If the auction proceeds are not enough to repay the loan, the bank also has the right to pursue other properties in the owner's name.
In this interview with Southern Weekend, Assoc Prof Bao Te from SSS at NTU Singapore proposes a “mixed recourse system” in theory. “ Namely, recourse may not be "all or nothing," but a percentage. For example, if the borrower cannot repay the mortgage, and the auction price of the house is not enough to repay the remaining loan, the borrower will need to repay 50% of the remaining loan balance after handing over the house, and the bank will bear the remaining 50% of the loss,” said Assoc Prof Bao.
Read the article here.