of ownership. If the mortgage remains current (and especially if the new buyer brings a formerly-defaulted mortgage current again) the original lender has no real incentive to elect acceleration of the note since they remain in a secure position. Benefits Buyers who cannot qualify for loans from traditional lenders may use wraps to facilitate a transaction. The standard to qualify for a wrap depends on each specific seller, which creates the potential for a wider buyer pool. Due to heightened credit risk, sellers may earn a higher interest rate on a wrap than lenders generally earn on conventional mortgages. Risks Because the wrap-around mortgage is a junior lien, the seller indirectly takes on the risk of the buyer defaulting on their original mortgage. In such an event, the lender of the original mortgage (not the wrap-around) could foreclose the property and take it away from the buyer. This risk can be mitigated by allowing the buyer to make payments directly to the original lender, rather than through the seller (who then has to be trusted to continue making payments). Wraps also introduce legal risk for sellers, as the original lender must agree to the secondary loan. Sellers must ensure compliance with the terms of their original loan and they continue to bear full responsibility for making payments on their mortgage. If the buyer defaults on the wrap, the seller has to continue paying the mortgage or else the property may be foreclosed. References External links "What is a Wrap-Around Mortgage?", J. Guttentag, (2002) http://www.meracord.com/Services/PrivateLoansLeasePayments/Seller-Finance https://www.1stukmortgages.co.uk/ Mortgage