What is a wrap around mortgage?
What are the risks of a wrap around mortgage?
One that I can think of: If the buyer defaults, the seller gets the property back (usually trashed) and has to resume making the payments on his mortgage. This can happen after the seller has already taken on new obligations and can't afford to resume the payment and thus loses the property to foreclosure and trashes his own credit.
What happens if the lender calls the note?
You, the original borrower, are good and screwed.
Are they LEGAL in the State of Texas?
The contract between you and your buyer is likely to be legal. But you selling the property and failing to disclose the sale to your mortgage company is a breach of your contract with your mortgage company.
If a problem arises, like lender calling the
note, can the buyer take civil or any other
action against me?
Let's face it. The ONLY reason you do a wrap around mortgage is if your buyer cannot qualify for a new mortgage with a bank or mortgage company.
And since you, sir, are not smarter than a bank or mortgage company you have no business becoming a lender to a person who cannot otherwise qualify for a new mortgage on his own.
It's a good way to end up in a very deep financial hole.