Wraparound

(redirected from Wraparounds)
Also found in: Dictionary, Thesaurus.

Wraparound

A financing device that permits an existing loan to be refinanced and new money to be advanced at an interest rate between the rate charged on the old loan and the current market interest rate. The creditor combines or "wraps" the remainder of the old loan with the new loan at the intermediate rate.

Wraparound

A loan whereby the borrower re-finances a previous loan at an interest rate between the current market rate and the interest rate at which the first loan was made, which is presumably lower. This allows the borrower to re-finance the first loan without being forced to accept a significantly higher interest rate.
References in periodicals archive ?
It should be noted that a number of court cases have disallowed the use of the wraparound in installment sales.
Several recent decisions illustrate the judiciary's formalistic requirement of meticulous planning and drafting to obtain certainty of result in wraparound installment sales.
Because the wraparound mortgage agreements define and govern the parties' obligations, the terms of the documents generally control the tax treatment of the transaction.
Accordingly, it would appear to be prudent to have legal counsel review the documents that support a wraparound transaction.
As a result of the tax court's decision in Professional Equities, the use of a wraparound mortgage will result in a lower gross profit ratio.
Because under the wraparound the buyer is neither assuming nor taking subject to the underlying mortgages, there is no reduction of the selling price.
By using the wraparound mortgage, the seller was able to circumvent the mortgage-over-basis problem and defer a larger portion of the gain to subsequent years than would have been the case under the temporary regulations.
Valachi, "Installment Sales of Mortgaged Real Estate and the Wraparound Mortgage," The Appraisal Journal (January 1980): 9-14.