Wraparound Mortgage

Wraparound Mortgage means:
a loan arrangement in which an existing loan is retained and an additional, larger loan, is made. The new lender accepts the obligation to make payments on the existing loan, which generally carries an interest rate below the rate available on new loans. Consequently, the yield to the wraparound lender is higher than the rate charged on the new loan. Sellers are the most common wraparound lenders. In an installment sale with a wraparound mortgage, the seller does not reduce the con-tract price by the amount of the underlying wrapped mortgage.