This type of loan usually requires the lender to provide a portion of the downpayment. This type of loan is guaranteed by the US Veterans Administration under the Servicemen's Readjustment Act of 1944 and later. The VA guarantees restitution to the lender in the event of default. Wraparound Mortgage Loan A loan arrangement in which an existing loan is retained and an additional loan, larger than the existing loan, is made. The new lender accepts the obligation to make payments on the old loan.
Sellers are the most common wraparound lenders.