The Wrap is Back

Friday, July 6th, 2007 | Money, Real Estate

Long ago, before many of you will remember, interest rates were so high that solutions had to be found to purchase a home. Back when Carter was President we heard a statistic called the misery index. Interest rates were in the high teens! Inflation was double digit! Unemployment was triple what we see today. It was extremely difficult to purchase a home. The news was reporting that home ownership for the masses was dead. But homes were bought and sold. Home ownership for the masses is at record levels. One of the solutions used in that era was “the mortgage wrap.” Now that the home spike has leveled off it looks like it is time to take “the wrap” off the shelf, dust it off, and put it to work again.

A wrap is a legal way of purchasing a conventional or VA mortgaged home that allows the seller to carry some of the equity and the buyer assumes the mortgage from the seller. The title company or other third party receives the buyer’s payment and distributes it to the mortgage company and the seller without triggering the “due on sale” clause of the mortgage. There are some that believe the “due on sale” may be triggered. I recently attended a seminar by Judy Powell at Chicago Title Branch Manager powellj@cit.com who says that a proper wrap will not trigger the “due on sale” clause.

For more information, read the article at http://realtytimes.com/rtcpages/20040531_wraparoundmtg.htm

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