Which arrangement involves a seller extending a mortgage to the buyer while continuing to pay the original loan and receiving payments from the buyer?

• A. Wraparound Mortgage
• B. Subject to Loan
• C. Non-Recourse Clause
• D. Agency by Estoppel

Answer: (A)

Wraparound mortgage is a seller-financing method where the seller extends a new loan to the buyer that “wraps” around the existing mortgage. The seller keeps paying the original loan to the lender, while the buyer makes payments to the seller on the new, larger loan. The seller uses those payments to cover the old loan and pockets the difference as profit. In essence, the underlying loan stays in place, but a new loan is created for the buyer that the seller administers. This setup fits the described scenario precisely: the seller extends financing to the buyer, continues to pay the original loan, and receives payments from the buyer.