wraparound mortgage

wraparound mortgage
n.
A second mortgage combined with an older mortgage with a lower interest rate than the current one, which results in a new interest rate between the old and current mortgages; the borrower makes payments to the new lender, who in turn makes payments to the lender that provided the original mortgage.

The Essential Law Dictionary. — Sphinx Publishing, An imprint of Sourcebooks, Inc. . 2008.


wraparound mortgage
USA
wraparound mortgage, Also known as a wrap.
A type of secondary financing for real estate acquisitions in which a seller offers a buyer a junior mortgage separate from senior mortgages that the real estate already secures. A seller accepts a promissory note secured by the property for the amount still due on the senior mortgage, plus another amount that can be as large as the remaining purchase money balance. The buyer pays the seller every month and the seller then pays the underlying mortgagee(s). If the new buyer defaults on its payments, the seller has a right to foreclose on the property.

Practical Law Dictionary. Glossary of UK, US and international legal terms. . 2010.

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