Wrap-Around Real Estate Loans

PURPOSE: This rule authorizes associations to make wrap-around real estate loans. (1) An association may originate, invest in, sell, purchase, participate or otherwise deal in wrap-around real estate loans provided that the loan is— (A) Secured by a lien on real estate on which there exists prior liens; and (B) Evidenced by a note or bond which— 1. Has a principal amount equal to the aggregate of the outstanding prior indebtedness plus the additional funds advanced or to be advanced by the wrap-around lender; 2. Requires payments by the wraparound borrower to the wrap-around lender of periodic installments at least sufficient to make required current payments on the prior indebtedness; and 3. Allows the wrap-around lender to make the payments due on the prior indebtedness. (2) The loan file shall contain complete documentation of the date, amount, interest rate, terms, maturity and unpaid balance of all prior liens on the security property together with estoppel letters or certificates from prior lien holders which obligate those prior lien holders to give the wrap-around lender notice of any default on the prior indebtedness and an opportunity to cure any the default. AUTHORITY: sections 369.144, 369.229, 369.249 and 369.299, RSMo 1994.* This rule originally filed as 4 CSR 260-8.055. This rule previously filed as 4 CSR 140-20.055. Original rule filed Nov. 4, 1986, effective Jan. 30, 1987. Changed to 4 CSR 14020.055, effective July 6, 1994. Moved to 20 CSR 1140-20.055, effective Aug. 28, 2006. *Original authority: 369.144, RSMo 1971, amended 1982, 1983, 1984, 1989, 1994; 369.229, RSMo 1971, amended 1983, 1994; and 369.249 and 369.299, RSMo 1971, amended 1994.