wraparound mortgage

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Wraparound mortgage

A second mortgage that leaves the original mortgage in force. The wraparound mortgage is held by the lending institution as security for the total mortgage debt. The borrower makes payments on both loans to the wraparound lender, which in turn makes payments on the original senior mortgage.

Wraparound Mortgage

A second mortgage that a borrower takes out to guarantee payment on the original mortgage. In this situation, the borrower makes payments on both mortgages to the wraparound lender, which then makes payments on the original mortgage to the original lender.

wraparound mortgage

A largely extinct financing tool involving a seller leaving its first mortgage in place while selling the property to another and holding the financing. The new mortgage “wrapped around” the old mortgage, so that the buyer made payments to the seller, who then deducted enough to make payments to the original mortgage lender.The practice has been rendered obsolete by the widespread use of the due-on-sale clauses in mortgage loans, making the entire principal balance of the loan due when the property is sold,whether or not there has been a default.There are a few circumstances when a due-on-sale clause is not enforceable (see that entry for details), providing an opportunity for wraparound mortgages.

References in periodicals archive ?
The sellers provided a 15-year wraparound mortgage of $600,000 to finance the deal.
W Financial has closed a $5 million wraparound mortgage blanketing two luxury properties in Manhattan and Old Greenwich, Conn.
In 1980 my article, "Installment Sales of Mortgaged Real Estate and the Wraparound Mortgage," on the use of a wraparound mortgage in the sale of real estate on the installment basis, appeared in The Appraisal Journal.
The legal principal - which holds that a holder of a wraparound mortgage must meet its obligations to the underlying mortgagee or it loses the wraparound mortgage - has been made clear in the case of 51 Fifth Avenue v.
com frequently publishes updated lender specific secrets on how to get investment properties' loan modified, and abundant free information and resources about rental management, owner financing tools like lease to own, land contract and wraparound mortgages.