Answering advertisements is one way buyers come in contact with unscrupulous lenders who specialize in a practice known as “predatory wraparound mortgages”.
News Story (Texas)
March 13, 2017
READ THE FULL STORY HERE
Tags: Consumer Protection, Housing: Mortgage, Predatory Lending
Organizations mentioned/involved: Texas RioGrande Legal Aid (TRLA)
So-called “wrap loans” are legal in Texas. When done legitimately, a home is sold with an existing lien still on it. The buyer uses a wrap lender to take out a second, higher-interest loan that “wraps” around the existing one. The idea is that the wrap lender uses the higher-interest payments from the second loan to pay off both over time.
But under wrap scams, a predatory lender purchases a home with a lien on it from an oftentimes desperate seller but, after reselling the home under a wrap loan, doesn’t use the higher payments to retire the previous debt.