web stats Web Analytics by Logaholic
Real Estate Terms & Meanings | Real Estate Dictionary | Property Language Explained |    Nov 21, 2017
Go to the Real Estate Bookstore






Real Estate Definitions - Encyclopedia
ISBN 978-0-9668946-4-6
£72.50/ US$115.00/ €87.00
Order securely online with


realestatedefined.com

Subscribe
or take a 15-day Free trial




Enter The Shorter Property Dictionary here
ISBN: 978-0-9668946-1-5
£15.00/ US$22.50/ €18.00
Order securely online with



Explore Real Estate Definitions on CD

ISBN: 978-0-9668946-2-2

Return to Real Estate Terms

wraparound mortgage(US)

A special form of second or junior mortgage granted against security of a property that is already mortgaged, whereby a new mortgagee assumes (that is, takes over) the obligation to pay interest and principal on the existing or 'in-place' mortgage (without assuming or extinguishing that mortgage, which retains its priority) and makes a further 'wrap-around' advance to the mortgagor. "A junior mortgage that secures a promissory note with a face amount equal to the sum of the principal balance of an existing mortgage note plus any additional funds advanced by the second lender. Wraparound mortgages may be used in several forms. … Typically, however, wraparounds are either purchase-money mortgages, where the wraparound lender is either the real estate seller or a third party, or refinancing or non-purchase-money mortgages, where the lender is either the same lender that holds the first mortgage or a third party. See Arditto, The Wrap-Around Deed of Trust: An Answer to the Allegation of Usury, 10 Pac LJ 023 (1979), for a discussion of various types of wraparound mortgages." Mitchell v. Trustees of U.S. Mutual Real Estate, 144 Mich App 302, 375 NW.2d 424, 428 (1985). The face value of the wraparound mortgage is equivalent to the amount outstanding on the 'in-place' mortgage, plus the additional funds advanced. The mortgagor undertakes to make payments to the new or subordinate mortgagee that are sufficient to cover that mortgagee's cost of servicing the existing mortgage, plus the interest on the new advance. In turn, the wraparound mortgagee undertakes to make all payments to the first or in-place mortgagee. A wraparound mortgage may be taken out when an in-place mortgage is held at a favorable interest rate and, therefore, the mortgagor does not wish to refinance the entire mortgage arrangements. The interest rate, or 'blended rate', on the wraparound mortgage is usually fixed at a rate between the in-place mortgage rate and the rate that would be charged if an entirely new advance was to be made. Sometimes called an 'overriding mortgage', an 'overlapping mortgage', an 'all-inclusive mortgage'; or, if the loan is made by means of a deed of trust an 'all-inclusive deed of trust'. See also assumption, purchase money mortgage.

Anno: 36 ALR4th 144: Wrap-Around Mortgage-Grantor Obligation.
M.T. Madison and R.M Zinman. Modern Real Estate Financing: A Transactional Approach (1991), pp. 834-847, 870-871.
R.J. Werner and R. Kratovil. Real Estate Law (10th ed. 1993), Ch. 25 "Real Estate Finance–Wraparound Mortgage".
G.S. Nelson and D.A. Whitman. Real Estate Finance Law (3rd ed. 1994), § 9.8.
© Delta Alpha Publishing 2011–2017

     Terms in bold are defined elsewhere in the Encyclopedia — more in the User Guide.

     Return to the Sample Terms



abandonment |  bargain |  commission |  cost approach |  démembrements(F) |  easement |  estoppel |  fixture |  good repair |  letter of intent |  licence by estoppel |  money
mortgage-backed security (MBS) | 3 multiple listing |  noscitur a sociis(Lat) |  police power(US)
 |  possibility of reverter |  quiet enjoyment |  real covenant(US) |  rent
spot zoning |  title insurance |  Torrens title system |  multiple listing service (MLS)(US)
 |  unvalued policy |  usufruit(F) |  value |  voluntary waste
 |  wraparound mortgage(US) |  zone a urbaniser (ZUP)(F)