Wrap around mortgage advice

[Nathan H.]

Hi BP Community,

I’m looking for some advice on a mortgage wrap deal I’m looking to do. I’m the seller and would be carrying the financing on a $750,000 duplex. The underlying mortgage is a conforming 30 year fixed and has a balance of about $500,000 so I would be wrapping that into a seller carry loan at about $640,000 and receiving $110,000 for the balance (15% down).  Buyer is as quality as it gets, so my concerns aren’t with a default. If anyone has any experience they’d be willing to share with mortgage wraps, I’d love to hear about it. My specific concerns include the following:

- Will it hurt my ability to borrow from conventional lenders since I'll have a liability but no asset securing it. Instead I'll have a promissory note and DOT. Not sure how Fannie and Freddie look at this.

- What are the odds of the mortgagor noticing the house has been sold and calling the loan due, assuming the payments continue to be made on time? What is a fair contingency plan for if the loan does get called? Buyer responsibility and seller responsibilities. 

- How does insurance typically work? If the buyer provides their own, I would think the lien holder would notice a change in the policy holder, especially if there was a claim. If it remains in the sellers name, the seller has some liability I’m sure. 

thanks in advance for your help.