All Forum Posts by: Julian Sanchez

@Eduardo Beltran

In a wrap mortgage the deed is transferred to the buyer at the time the wrap is created. The wrap actually wraps around an existing superior lien. I think you may be confusing a wrap with a contract for deed. A contract for deed is a type of property transfer in which equitable title is passed but legal title remains with the seller, or whomever owns the contract for deed. The contract itself will specify when legal title is transferred.

If legal title is transferred, than a lien holder has the right to initiate and foreclose if the mortgage provisions or deed of trust covenants are violated. In most circumstances, the borrower is granted a period of time to correct the violation.

With a wrap mortgage legal title was already transferred to the borrower at the time of the creation of the wrap...usually. In a wrap when the underlying mortgage is paid off the wrap part ends and the remaining loan is now in first position. Almost the same effect can be achieved with the assumption of the first and a seller financed second. The wrap however gives the seller more control and if the seller wrap is at a higher interest rate than the loan being wrapped, the seller will earn the differential on the wrapped portion.

40 years ago we did subject tos, assumptions, wraps, contract for deed, all the time. Now, with low low interest rates on new loans, they’ve become somewhat obsolete, except in very specific situations