1,466,257
Brian Burkhalter Wraps were done a lot years ago when there were mortages that were assumable. A Wrap without lender permission today would probably trigger the due on sale clause.
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Nina Hollander, Broker
Charlotte, NC
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Mary Yonkers
Erie, PA
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Kathleen Daniels, Prob...
San Jose, CA
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Kasey & John Boles
Boise, ID
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Doug Dawes
Topsfield, MA
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Ron and Alexandra Seigel
Carpinteria, CA
921,504
Wow! That was a long long time ago, when horses roamed the prairie and the antelope played.
Today, a wraparound is only possible ONLY when private financing is involved. The benefit is one can acquire real estate and create a profit on resale, or leverage some form of equity associated with that property.
Public lenders who grant mortgages to occupant buyers always include a 'Due on Sale' clause. That means the mortgage must be paid in full before property can be retitled. Those who are 'feeling lucky today' believe there are ways to circumvent the clause....such ideas often lead to the unaware paying a very high price.
Since the Bank of America caused collapse, I have not been involved in a wraparound.
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Kathleen Daniels, Prob...
San Jose, CA
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Lyn Sims
Schaumburg, IL
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Kasey & John Boles
Boise, ID
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Doug Dawes
Topsfield, MA
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Carol Williams
Wenatchee, WA
86,514
A "wrap" or All Inclusive Deed of Trust (AITD) was used primarily by investors when we had the Wellenkamp decision which allowed taking a mortgage "Subject to" or just assuming the note. It was NOT a formal assumption so it made it a lot easier. It worked in a high interest rate market very well. With rates in the 12-15% range! You could make money on the "spread". Say the underlying note was at 7% (fabulous in those days!) with a balance of $100,000. You "wrapped" it at 12% (usually under prevailing rates at the time) so your payment was based on the new note of 12%. So you made in reality 5% on the wrapped amount but 12% on the balance. It let folks into homes because of the super high rates and investor's got it, liked it and used it!
In light of today's super tight lending practices be careful. FHA is the last of the "subject to" loans. Wrapping private money is another matter. Just be careful as you have to make sure the underlying or "wrapped" mortgage is being paid!
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Kathleen Daniels, Prob...
San Jose, CA
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Kasey & John Boles
Boise, ID
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Doug Dawes
Topsfield, MA
1,045,440
Yes but these are more typical of buyers who lack the financial ability to buy since our interest rates are currently still low... as they rise its likely these may be happening more often
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Rachel Dunn
Reesville, OH
3,071,489
I have not
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Nina Hollander, Broker
Charlotte, NC
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Doug Dawes
Topsfield, MA
5,583,328
in 39 years, I've not every dealt with a transaction that required a wraparound mortgage....
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Nina Hollander, Broker
Charlotte, NC
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Doug Dawes
Topsfield, MA
4,901,858
I have not. Careful the lender does not call the note.
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Nina Hollander, Broker
Charlotte, NC
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Doug Dawes
Topsfield, MA
5,772,587
Brian,
I agree with Michael Setunsky
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Doug Dawes
Topsfield, MA
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Michael Setunsky
Woodbridge, VA
2,375,711
no - that was popular in the past but I don't see them now
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Nina Hollander, Broker
Charlotte, NC
1,231,853
2,684,669
Way back when.
Today you risk triggering the due on sale clause. Use an Attorney!
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Nina Hollander, Broker
Charlotte, NC
1,712,776
2,221,377
1,241,879
Must be Utah school students studying antiquated topics. The materials have not been updated for at least 20 years.......
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Nina Hollander, Broker
Charlotte, NC
6,419,449
I have not, but I know others who have a long time ago.
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Nina Hollander, Broker
Charlotte, NC
3,349,554
Lots of good explanations here. I have never been involved with a wrap. I have nothing to add that has not already been discussed.
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Nina Hollander, Broker
Charlotte, NC
1,847,051
Brian, you ask too many questions. How about we ask you one?
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Nina Hollander, Broker
Charlotte, NC
5,877,915
4,961,547
1,506,163
1,728,256
4,800,132
599,734
5,113,121
4,319,773
259,055
3,986,308
3,988,013
Years ago we used this as a way to sell homes because interest rates were so high. It saved the buyer money over the current interest rates and helped the seller sell a home. The due on sale clauses in today's mortgages prohibit this and with low interest rates it isn't practical to even consider.
2,784,726
809,258
7,864,182
1,201,652