A man is seeking a loan to buy a parcel of land.
He also wants a construction loan after the land has been acquired.
When the mortgage for the land is taken out the purchaser needs to include a wraparound clause in the mortgage for the land.
Is this fact true or false ?
Take your time. The solution is posted below the wildlife photo.
The buyer wants a subordination clause in the mortgage for the parcel of land due to the fact that new constructiuon loans usually seek the first lien position in the order of priority in the event of a default.
A wraparound clause is a type of loan clause that allows the seller to use part of the buyer's payment to make payments on an already existing loan. A buyer takes title subject to the existing loan and doesn't assume responsiblility for it.
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