Finance
A 'wraparound mortgage' involves:
AA second mortgage subordinate to an existing first mortgage
BA new mortgage that encompasses an existing loan, with the seller continuing to pay the original lender✓ Correct
CAn adjustable-rate loan that wraps around a fixed-rate loan
DA construction loan that converts to a permanent loan
Explanation
A wraparound mortgage is an all-inclusive mortgage where the seller (as lender) creates a new larger loan for the buyer at a new interest rate, but continues making payments on the underlying original loan. The seller captures the spread between the two interest rates. It is a form of seller financing that can be risky if the underlying loan has a due-on-sale clause.
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