What Is A "wrap Around Mortgage"


LoanSafe Member
Feb 11, 2009
I had one of many cash investors contact me again about my rental property in GA. I may have about 5k in equity or so and told the guy that. I have a general idea that these guys are looking for distressed homes or owners but told him straight out that's not my situation. While I would like to sell and get out of the rental business, he mentioned a wrap around mortgage.

My short research shows it may be legal but I don't think it will do me any good because I want the home "cleared" out of my name not someone else making payments to me and me still making payments to the lender to have this investor promise to pay for the home in 5 years!! Besides, what if the lender finds out and demands their note immediately.. I am not educated on this process and not willing to take chances.

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Moe Bedard

Call 1-800-779-4547
Staff member
Loan Safe Mortgage
Aug 10, 2007
Southern California
Hello babbles,

They are legal persay, but the lender may call the mortgage due if they find out a borrower has done a wrap around mortgage. Basically you are selling the home, but staying on the mortgage. You are wrapping it for the straw borrower but you are still liable for the loan. You agree to sell the home at a set price and they just assume your mortgage payments until they can get a new loan, if ever.

Best case scenario, they get a new loan in a couple years and you are off the mortgage. Worst case is they cannot get a new mortgage and or they just decide to squat in your home.