New Law in Texas regarding Wrap Around Mortgages

My Texas Colleagues be aware that starting January 1st, 2022 Wrap Around mortgages can only be close by an Attorney or Title Officer.

A wrap around mortgage is a type of loan that falls under seller financing while the seller still has a mortgage with another lender. In other words the buyers owner financed loan is wrapped around the seller’s existing mortgage. The Statute was changed to provide buyer safe guards of owner financed mortgages.

Texas Finance Code Section Sec. 159.105. ENFORCEABILITY OF WRAP LIEN. A lien securing a wrap mortgage loan is void unless the wrap mortgage loan and the conveyance of the residential real estate securing the loan are closed by an attorney or a title company.

Sources: Texas Finance Code and National Notary Association Legal alert for October 2021.