Wrap Around Mortgage Law and Legal Definition
A wrap-around mortgage is a loan transaction in which the lender assumes responsibility for an existing mortgage. In most instances, the lender is the seller and this is a method of seller financing. Another type of home-seller financing is a second mortgage, however, with second mortgage financing, the old mortgage is repaid, whereas with a wrap-around it isn't.
In general, only assumable loans are wrappable. Assumable loans are those on which existing borrowers can transfer their obligations to qualified house purchasers. Today, only FHA and VA loans are assumable without the permission of the lender. Other fixed-rate loans carry "due on sale" clauses, which require that the mortgage be repaid in full if the property is sold.
Legal Definition list
- Wrap Account
- Wounded Feelings
- Wrap Around Mortgage
- Wrap Fee
- Wrap Program