Finance
A Florida property is subject to a 'wraparound mortgage.' This means:
AThe property has multiple mortgages that cover the entire value
BA new mortgage that includes an existing mortgage within it, with the seller/lender collecting payments and making payments on the underlying mortgage✓ Correct
CA second mortgage that 'wraps around' the property boundary
DA government program that guarantees all mortgages on the property
Explanation
A wraparound mortgage is a seller-financing technique where the seller retains the existing mortgage and creates a new, larger mortgage to the buyer. The buyer makes payments on the wrap to the seller, who continues paying the underlying mortgage. The wrap rate is typically higher than the underlying rate, allowing the seller to profit on the interest spread. Wraparounds require the underlying mortgage to not have a due-on-sale clause.
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