Is this what I've heard called "a wrap"?

[Jason Barr]

My rental portfolio is made up of duplexes and SFHs. I began this year trying to look at and educate myself about commercial multifamily. I watched a property go on the market then close and the closing price was around $2000. So I asked my realtor friend to approach the seller's agent and ask if they would share the details of the transaction because I suspected that there was something going on that I could learn from. Maybe seller financing or ... I don't now what.

We got the contract and was told "it was a land contract". I've read through the contract and will summarize here with simplified numbers (not the actual numbers) what I believe the contract says and follow up with some questions for you more knowledgeable members:

1) Purchase Price: $100k

2) Initial Down Payment: $10K

3) Buyer pays seller monthly payments based on 30 year amort of 90k at 5% which is $484/month

4) Remaining principal balance to be paid off on the defined Closing Date (roughly 2 years from now)

5) Buyer pays taxes and insurance

6) Buyer to provide Seller a Loan Commitment from a Lender on or before the Closing Date

7) Seller will transfer Deed when Buyer pays full Purchase Price

8) Buyer will pay the Seller's existing monthly mortgage payment that exists on the property, which is $100/month, directly to the bank. The Buyers payment made to the Seller will be less the $100 paid to the bank.

Its a 20 page contract but I think those are the relevant details. I think bullet point #8 is the interesting part.

My questions for those of you with more experience are:

1) Is this what I've heard called "a wrap"?

2) If yes, I thought that these were ... maybe ... not allowed any more?

3) This seems like a form of seller financing which I thought had been made more difficult or maybe illegal with new laws (maybe Dodd Frank)? Is that true?

4) What are the pros/cons from the Seller side?

5) What are the pros/cons from the Buyer side?

Thanks,

Jason