Anaconda Mortgage Law and Legal Definition
Anaconda mortgage is a specific kind of mortgage that guarantees all debts of the borrower that are payable to the lender. It contains a clause called a dragnet clause or Mother Hubbard Clause which says that it secures the debt originally intended by the parties, and all future debts that may become due and owing in the future. The unsuspecting debtor becomes “enwrapped in the folds of indebtedness”-thus the name anaconda. Since the mortgagee could acquire all mortgagor debts at substantial discounts and then enforce them by threat of foreclosure, the courts view such clauses with disapproval. Most courts demand some relationship between the two debts as well as some specific mention in the second loan agreement to the earlier anaconda clause. However, if the second debt is secured by its own collateral, the anaconda clause will not apply.