anaconda mortgage


Also found in: Idioms.

anaconda mortgage

A mortgage containing a clause saying it secures the debt originally intended by the parties, and all future debts that may become due and owing in the future. Such clauses are sometimes called dragnet clauses or Mother Hubbard clauses.The effect is that a borrower with multiple loans—real estate, automobile, line of credit, checking account overdraft protection, business—may find that the lender will require all sale proceeds when the property is sold,even though the borrower might have substantial equity under the terms of the specific note originally secured by the mortgage.Debtors find themselves squeezed to death,like being encircled by an anaconda snake.The courts disfavor such clauses and usually refuse to enforce them unless there is some relationship among the debts and some specific reference in later loan documents to the earlier anaconda clause.Despite that,it is recommended that you ask mortgage lenders to delete the clause from their instrument before you sign.

References in periodicals archive ?
Mortgage terms of art include anaconda mortgage or the similar Mother Hubbard clause, which provides that in the event of default the mortgagee may foreclose on any loans that are owed by the mortgagor to the same mortgagee.