wraparound mortgage

wraparound mortgage
A second mortgage that takes over the first. The first mortgage loan is not paid off. Instead, the borrower makes payments to the second mortgage lender for the debt service of both the first and second liens. The second lien holder then makes the payments to the first lien holder. This type of mortgage is used when the borrower is unwilling or unable to refinance the first mortgage. Prepayment of the first mortgage may be prohibited or may be subject to high penalties. Alternatively, the first mortgage may have a very attractive fixed rate of interest. The wraparound arrangement permits the borrower to leave the first mortgage intact while giving more control to the lender willing to make the second mortgage. American Banker Glossary
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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. Bloomberg Financial Dictionary

Financial and business terms. 2012.

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Look at other dictionaries:

  • 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… …   Law dictionary

  • Wraparound Mortgage — A type of loan that enables a borrower who is paying off an existing mortgage to obtain more financing from a second lender or seller. The new lender (typically a bank or the seller of the real property) assumes the payment of the existing… …   Investment dictionary

  • Wraparound mortgage — A wrap around mortgage is a form of secondary financing in which a seller extends to a purchaser a junior mortgage which wraps around and exists in addition to one or more superior mortgages. Under a wrap, a seller accepts a promissory note from… …   Wikipedia

  • wraparound mortgage — a mortgage, as a second mortgage, that includes payments on a previous mortgage that continues in effect. [1970 75] * * * …   Universalium

  • wraparound mortgage — A second mortgage which wraps around or exists in addition to a first or other mortgages. Form of secondary financing typically used on older properties having first mortgages with low interest rates in which a lender assumes the developer s… …   Black's law dictionary

  • wraparound mortgage — a mortgage, as a second mortgage, that includes payments on a previous mortgage that continues in effect. [1970 75] …   Useful english dictionary

  • wraparound mortgage — / ræpəraυnd ˌmɔ:gɪdʒ/ noun US a type of second mortgage where the borrower pays interest only to the second lender (who then pays the interest payments on the first mortgage to the first lender) …   Dictionary of banking and finance

  • Mortgage loan — Mortgage redirects here. For other uses, see Mortgage (disambiguation). Finance Financial markets …   Wikipedia

  • mortgage — /morgaj/ A mortgage is an interest in land created by a written instrument providing security for the performance of a duty or the payment of a debt. At common law, an estate created by a conveyance absolute in its form, but intended to secure… …   Black's law dictionary

  • mortgage — /morgaj/ A mortgage is an interest in land created by a written instrument providing security for the performance of a duty or the payment of a debt. At common law, an estate created by a conveyance absolute in its form, but intended to secure… …   Black's law dictionary

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